The dollar continued to strengthen on strong US economic data today. The resultant effect was felt across board and the narratives highlighted in some of our previous articles were in line with this.
EURUSD -0.86%
S&P500 (SPX) -2.06%
NASDAQ (NDAQ) -2.19%
DOW (NYSE:DOW) -2.26%
Oil -3.46%
The expected continuation of the downward momentum on US equities continued with S&P500 (SPX) sweeping liquidity at the lows of last week on the back of a spike in Volatility (VIX) and the Put-Calls Ratio.
The FOMC meeting minutes came out as expected with almost all FED officials backing 25BPS hike, with a few even backing a 50BPS hike. This outcome continues the so called ‘good news conundrum’ on the US dollar, which looks more likely by the day to result in a stronger dollar and a recession through 2023.
In our Spread of the Week article, we explained some of the reasons for a likely sweep of the lows of last week on EURUSD, this target has been reached and we expect the bias, going into Thursday and Friday, to remain bearish, barring a complete flip in the internals.
We will also be watching the closes on the other risk off assets like Bonds, the Yen and Swiss Franc, to see if any spreads evolve.