Strong U.S. retail sales data, Powell promises Fed to keep raising interest rates

Fundamentals:

U.S. retail sales data was strong on Tuesday. The monthly rate of U.S. retail sales in April was 0.9%, the highest since January this year, in line with expectations; the previous value was revised up from 0.5% to 0.7%. U.S. retail sales rose strongly in April and motor vehicle sales climbed amid improving supplies and spending at restaurants, giving the economy a major boost at the start of the second quarter.

Yesterday, Federal Reserve Chairman Jerome Powell pledged that the central bank would raise interest rates to levels needed to contain a surge in inflation, which he said had threatened the economic fundamentals. Powell acknowledged that controlling inflation could lead to “pain” like slowing economic growth or rising unemployment, but said there were “paths” to slowing the pace of price increases without triggering a full-blown recession. Powell said that if inflation does not fall, the Fed will continue to raise interest rates until inflation falls.

Technical:

Dow: Powell's speech did not prevent U.S. stocks from closing higher across the board. The S&P 500 closed up 2.02% at 4088.85 points; the NASDAQ closed up 2.76% at 11984.52 points; the Dow closed slightly up 1.34% at 32654.59 points. The Dow bears pierced the lower support and then pulled back near 32222, focusing on the target position of 34120 above the range band.

USD: The yield on the 10-year U.S. Treasury bond recovered somewhat and ended at 2.995%. The U.S. dollar index retreated from a 20-year high and ended down 0.902% at 103.3. The U.S. dollar index fell from a high level, and the bulls did not have the advantage of the profit-loss ratio. The bears reached the target position near 103.4 as expected. If it falls below the first support position, pay attention to the target position of 102.3 below.

Gold: Gold rose to 1836 in the previous trading day and then turned down, giving up all gains in the day, and finally closed down 0.5% at $1814.67 per ounce; Powell promised on Tuesday that the U.S. central bank will raise interest rates as needed to curb Sky-high inflation that threatens the fundamentals of the economy. The Fed has hiked rates by three-quarters of a percentage point so far in 2022 and is on track to raise rates by another 0.5% at its next two meetings in June and July 2022. Gold fell to the 1807 position at the opening, continue to pay attention to the band callback of gold, and pay attention to the target position of 1858 above the range.

Crude oil: WTI crude oil increased volatility in the U.S. session, and finally closed down slightly by 0.12% at $113.58 per barrel; Brent crude oil finally closed up 1.03% at $112.17 per barrel. For the first time since May 2020, the settlement price of WTI crude oil futures exceeded the settlement price of Brent crude oil futures. At present, it is cautious to chase more and pay attention to the opportunity to open short positions at the pressure level near 118 above the bulls.

(The above analysis only represents the analyst's point of view, the forex market is risky, and investors should be cautious)