GLOBAL STOCKS AND CRYPTOCURRENCIES TUMBLE AS RECESSION BETS RISE
American stock futures tumbled on Monday, continuing the sell-off that started last week. Futures tied to the Dow Jones declined by more than 573 points while those linked to the Nasdaq 100 and S&P 500 fell by 327 and 90 points respectively. This sell-off was mostly attributed to the rising hopes of a more aggressive Federal Reserve and fears of a recession. Data published by Friday showed that inflation surged to the highest point last week. Gasoline, which is a major part of inflation figures rose to a record high. The Fed will start its meeting on Tuesday and deliver its decision on Wednesday.
European stocks tumbled as inflation concerns remained. According to the Wall Street Journal, many European companies will either close or relocate because of the surging natural gas prices. Some of the most affected companies are those in the fertilizer, steel, and aluminum businesses. These companies had relied heavily on cheap Russian gas. As a result, the likely scenario is where these firms import more and export less because of their rising costs. In Germany, the DAX index fell by more than 2% while in France, the CAC 40 index declined by over 2.2%. The Stoxx 40 index fell by over 1.8%.
The FTSE 100 and British pound declined sharply after the weak economic data from the United Kingdom. According to the Office of National Statistics (ONS), the country’s economy contracted for the second straight month in April as it fell by 0.3%. This decline was worse than the median estimate of a 0.1% expansion. For the first quarter, the economy expanded by 0.2%, which was also lower than expectations. Other numbers like manufacturing and industrial production also declined. Therefore, there are concerns about whether the Bank of England will continue hiking in a period of stagflation.
EURUSD
The EURUSD pair declined sharply as US inflation concerns continued. It fell to a low of 1.0465, which was the lowest level since May 18. On the four-hour chart, the pair dropped below the 23.6% Fibonacci retracement level. It also crashed below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) moved below the oversold level. Therefore, the pair will likely continue falling as bears target the next key support level at 1.0400.
GBPUSD
The GBPUSD pair dropped to the lowest level since May 16 after the weak UK economic numbers. The pair managed to drop before the important support level at 1.2427, which was the lowest point on June 7. It also moved below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved below the oversold level. Therefore, the pair will likely continue falling as bears target the next key support at 1.2100.
USDCAD
The USDCAD pair continued to rally as the US dollar remained strong. The pair rose to a high of 1.2854, which was the highest point since May 27. It managed to move above the key resistance level at 1.2767. The pair’s upside is still being supported by the 25-day and 50-day moving averages while the Stochastic Oscillator and the Relative Strength Index (RSI) has moved above the overbought level. Therefore, the pair will likely have a pullback as sellers target the support at 1.2767.
