All major US dollar leveraged equity and commodity are currently fielding lows as the USD continues its decline amidst US inflation concerns.
The Nasdaq basket index has taken the brunt of the blow following the tech sector’s massive Underperformance in the market. Nasdaq has fielded the worst price decline so far, with its new opening rates now showcasing a creeping low. This record equals its 2009 start record and marks the second time in the last 30 years that the composite has experienced such misfortune.
US Dollar’s Decline And Feds Soaring Rate-Hike Odds
The US dollar’s continuous decline has dealt several blows to commodities and equities backed by the green paperback as bear trades continue to emerge globally in the market space. The bearish bets traders and investors are fielding in the market is a significant catalyst speeding you the fiat currency decline.
Inflation concerns, nationwide economic pessimism, and the US Federal reserves new interest policy are factors that have amalgamated to trigger the long-term fiat currency’s decline as the declining impact rocks the market space globally.
Through its Chairman Powell’s office, the federal reserve has announced the advent of increasing inflation and hinted at a new interest rate hike in at least three instances in 2022. Inflation on a high race, optimism is at an all-time high, and stress is at an all-time high according to the relevant measurement metrics that included the consumer purchase index (CPI), Stress Index, and the Retail Report.
America’s European counterparts are now set to generate more GDP in 2022 and 2023 due to the US dollars decline and predicted sustenance of fielded decline. The Biden administration’s stimulus failure is also a significant player in the greenback’s gradual decline.
USD Decline’s Far-Reaching Effect
The USD decline has severely impacted significant facets of the global finance community, with the Nasdaq composite taking the brunt of the wave.
The Nasdaq has moved up to recover earlier price decline in the weekly timeframe. The Dow industrial and Small Caps (S&P) indices were the week’s second-place losers.
Nasdaq’s most recent price recover leverage support from the 200-day moving average (DMA) while the Dow index dropped below its 50-DMA.
Banks and financial institutions globally were shaken badly this week despite their impressive upswing at the early start of the year. The JPM Bank was one of the biggest losers as it suffered a 20-year record low post earning price dip.
Institutional giants Goldman Sachs, JP Morgan, and Morgan Stanley all fielded a net negative decline to the red borderline for the year post USD decline whole Wells Fargo & co (WFC), by contrast, exhibited an approximate 20% price increase in the year-to-date (YTD) timeframe.
WFC’s outperformance is a flagship for other commodities producers that track the global economy pegged to the USD like crude oil and metals as the greenback’s decline equated to intrinsic value increase on the dollar.
US tech companies in the long term, super-growth, and non-profit sector have continued to field price crash this week following last week’s slow decline. The third week’s crash recorded a 49% dip from the sector’s highs in February 2021.
Growth stocks have showcased massive Underperformance this week; value stocks, however, offered lower closing prices though not entirely in the net negative margin. The yield curve globally has declined this week and mostly straightened out, now flatter on the year.
Interest Rate-hike odds have spiked after rumors suggesting that the Fed could field up to 7 instances of an interest rate increase this year diffused in the finance community globally. The market reflects these sentiments, with indicators now indicating a 75% possibility of a quadruple rate spike before the end of 2022.
The cryptocurrency industry has also fielded a choppy week but is now closing with the Bitcoin and Ethereum showcasing higher highs with over 3% net Increase by the week. The leading crypto Bitcoin is reportedly about to encounter the death cross-the intersection between the 50DMA and the 200DMA. In June last year, the last death cross saw the cryptocurrency exhibit record lows, a price action that BTC could mirror in 2022.
Gold and Oil prices have surged this week, with both commodities fielding record highs leveraged on the spiking decline of the US dollar.