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MTrading Team • 2022-04-28

Equities, BTC rebound despite USD’s fresh five-year high, US GDP, Russia in focus

Equities, BTC rebound despite USD’s fresh five-year high, US GDP, Russia in focus

Bears took a sigh of relief on Wednesday as US equities cheered results from giants like Qualcomm and Meta while a lighter US economic calendar allowed short-covering ahead of today’s key US GDP data.

US Treasury yields, however, rebound from a fortnight low before easing of late whereas the US Dollar Index rose to the highest levels since 2017. 

The greenback’s rally weighed majorly on the EURUSD and GBPUSD prices while USDJPY remained firmer and jumped to a fresh 20-year high on BOJ’s double-down on easy money.

Gold prices dropped to the lowest levels in two months but oil prices struggle amid the EU’s oil embargo on Russia and hopes of fresh energy supplies.

BTCUSD and ETHUSD both recovered from a six-week low amid consolidation, as well as on news from Central Africa and BlackRock.

Following is the list of major assets’ latest performances:

  • Brent oil remains indecisive around $105.00, down 0.40%.
  • Gold extends the previous day’s losses to $1,872, the lowest since mid-February.
  • USD Index prints six-day uptrend while poking the 2017 highs around 103.70.
  • FTSE 100 rises 0.55% while DAX rallies over 2.0%. Further, EUROSTOXX50 adds 1.7%.
  • Dow Jones and S&P 500 rose 0.20% but Nasdaq closed mostly unchanged around 12,490.
  • BTCUSD rise 0.70% to $39,500 while ETHUSD approaches $2,900, up 0.30% intraday.
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Markets pare back losses ahead of US GDP

Wall Street managed to stage a rebound, even though likely ephemeral, on an upbeat earnings report and a record US trade deficit. Also favoring the equities were receding calls for a 0.75% rate hike by the Fed and European enterprises’ efforts to ease the energy crisis in the bloc, despite the political upheaval with Russia.

The US Dollar Index (DXY) is up for the sixth consecutive day while poking the 2017 top but the cautious sentiment ahead of the US GDP and a pullback in the Treasury yields seem to test the greenback bulls of late. Even so, the USD strength can be well-witnessed in the prices of gold, which drops to the lowest since mid-February.

It’s worth noting that fresh lockdowns in China, due to the covid resurgence, add weakness to the gold prices as the dragon is among the top-two consumers of the bullion. The same also tests the equity buyers in the Asia-Pacific region even as the Bank of Japan’s (BOJ) readiness for unlimited bond-buying and downbeat economic forecasts favor the rebound.

Crude oil prices remain inactive as European policymakers brace for fresh sanctions on Russian oil and gas imports but companies from Austria, Germany, Hungary and Slovakia prepare energy payments in ruble and ease the energy crisis in the bloc.

BTCUSD extends the previous day’s rebound from a six-week low as the Central African Republic (CAR) terms Bitcoin as a legal tender, following the footsteps of El Salvador. Adding to the biggest cryptocurrency gains is the introduction of a crypto-backed ETF by the world’s largest asset manager BlackRock.

⏫ 🟢 Strong buy: USDJPY

⏬ 🔴 Strong sell: Nasdaq

⬆️ 🟢 Buy: USD Index, USDCAD

⬇️ 🔴 Sell: DOW JONES, S&P 500, DAX, FTSE 100, brent oil, silver, gold, ETH/USD, BTC/USD

Bulls have a long way to go

Despite the intermediate rebounds, market players remain tense as the Russia-Ukraine tussles and China’s covid woes keep weighing on the sentiment. Also challenging the risk appetite is the global central bankers’ readiness to tighten the monetary policy outside China and Japan.

That said, today’s first readings of the US Q1 2022 GDP and PCE Price Index data will be crucial for traders to watch amid hawkish Fed concerns. Although US GDP is expected to weaken due to the supply-chain problems and inflation woes, a lesser-than-expected disappointment will not hesitate to propel risk-off moves.

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