Euro and gold to near-record lows

Markets in Europe are expected to open in the red following a global market sell-off that extended into Asia on Wednesday, as investors shifted to safe havens like the US dollar and government bonds in lieu of riskier assets. The announcement that Russia might cut off gas supplies to Eastern Europe added to the gloom, sending the MSCI world equity index to 13-month lows. 

US markets

The Nasdaq 100 lost ground yesterday, declining to its lowest levels in more than a month. In addition to causing concern over the rally's failure, it also points to a general lack of confidence in the economic outlook. In addition, it means scepticism about the capabilities of central banks to soften the blow of rising inflation.

FX market

On Wednesday morning, the dollar was up at its highest level since the COVID-19 pandemic began, setting the stage for its best month since 2015. The strengthening dollar pushes more pressure on gold and bitcoin, significantly when rising bond yields increase the opportunity cost of holding non-yielding gold. Precious metal witnesses a crucial battle at the key pivotal level of $1900. 

The Euro fell to a five-year low in early trade, falling below its COVID-19 lows, with sellers dragging the single currency to 1.063. Russia's Gazprom announced earlier today that it would stop gas supplies to Poland and Bulgaria, raising concerns about energy security and economic growth in Europe. However, Russian gas supplies are flowing normally for the time being.

20-year inflation record ahead of RBA meeting 

Australia's consumer prices jumped at their fastest annual pace in two decades last quarter. This was fueled by the rises in petrol, home building and food costs, fueling speculation interest rates could rise next week from record lows. The data strengthen the view that the Reserve Bank of Australia (RBA) doesn't need to keep interest rates at emergency lows of 0.1% and should tighten in early May meeting rather than June.

The consumer price index (CPI) jumped 2.1% in Wednesday's data, topping market predictions of a 1.7% increase. The annual inflation accelerated from 3.5% to 5.1% in the first quarter, a level not seen since 2001.

A widely watched measure of core inflation, the trimmed mean, hit a record pace of 1.4% in the quarter. This brought it to 3.7% annually for the first time since early 2009.

As well commodity currencies also saw gains capped, with the Australian dollar at a two-month low and the New Zealand dollar near its lowest levels of 2022 to date.