Russia – Ukraine
Core CPI a Touch Softer
Earnings in Focus
US CPI was the key focus of the markets yesterday. As we predicted, the bar was set high for the print as the markets expectations of a hawkish FED has run rampant. As such the USD was sold off following the print, as we thought it would be, for all of…2.5 minutes.
With core CPI rising at a slower rate than expected, risk markets have found some support. Yields have backed off a touch as crypto consolidates and equities find a bid. However, to us this feels just like a temporary relief rally and will be short lived. Risk remains on fragile ground and may continue to do so for a while now. We are pushing back our timeline for a risk rally to H2 as markets look like they will struggle this quarter.
Crypto actually is the one asset class we are happy to be involved in. Don’t get us wrong, if global risk sentiment remains on the backfoot it is unlikely that crypto maintains a sustained rally. However, it does have its own story and so we are happy to put money to use in crypto. Last week saw decent outflows from crypto funds as the market took profit following the recent rises seen in the sector. There is more downside protection being put on in BTC and ETH as negativity seems to be seeping in as it is elsewhere. The levels are fairly well defined. You could run long of both BTC and ETH with very tight stops through $39,200 and $2950 respectively. On the topside $42k and then $45k are the resistance levels. The best performer over the last 24 hours…SHIBA, up c.20%. In other news, Circle raised $400m in a funding round that included BlackRock, Fidelity, Marshall Wace and Fin Capital.
The trades to have on seem fairly straightforward. Long USD against low yielding currencies like EUR, JPY and CHF, short equities and short rates. However, we struggle to get involved in these trades at such levels. We are looking to sell rallies in EUR/USD toward 1.0930 and buy dips in USD/JPY toward 123.50.
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