Forex

The main theme in the forex market during April was the strong US dollar. The dollar index, which measures the performance of the USD against other currencies, rose to the highest level since 2017. This happened as the currency rose against most currencies. The worst performer in the index was the Japanese yen, which crashed to its lowest level since 2002 after the BOJ vowed to continue with its easing policies.

The US dollar rose as the market priced in more tightening by the Federal Reserve. Most of them expect that the bank will continue hiking interest rates. This view was confirmed by statements by Fed officials like Jerome Powell and Mary Daly.

In Europe, the euro declined to the lowest level since 2017 as worries about stagflation in the European Union continued. Data published by Eurostat revealed that the bloc’s GDP eased in the first quarter while inflation surged to a record high. As a result, the European Central Bank warned that it will take time before it starts hiking interest rates.

Commodities

Commodity prices remained at elevated levels as the crisis in Ukraine continued. The Bloomberg Commodity Index rose for the fifth straight month and is trading near the highest level in 2013. In energy, the price of crude oil rose by more than 1.4% while European natural gas jumped to a record high after Russia blocked shipments to several countries.

Meanwhile, precious metals like gold and silver retreated as investors worried about rising interest rates. Gold declined by more than 2% while silver fell by over 8.57%. Historically, these metals have an inverse relationship with the US dollar.

Base metals had a mixed month as China continued its Covid-zero strategy. Copper fell by over 7% while nickel fell by 6%.

Indices

Global indices declined sharply in April due to worries over the Federal Reserve’s series of rate hikes and disappointing corporate earnings. The earnings season continued, with most companies expressing worries about margins. According to FactSet, 55% of all companies have published their results. Of these, the blended earnings growth rate has been 7.1%, which is the worst growth since the fourth quarter of 2020.

The Nasdaq 100 index collapsed by 14% in April as big companies like Amazon and Netflix reported poor quarterly results. Other companies that had a difficult month were Teladoc. Boeing, and Western Union. The S&P 500 index fell by 9%. Elsewhere, in Europe, the DAX, Stoxx 50, and CAC 40 indices also declined sharply.

Economic Events

The Bank of Japan surprised the market by sticking to its dovish tone even after the Japanese yen collapsed to the lowest level in 20 years. It left interest rates unchanged and pledged to continue buying back assets. The Bank of Canada and the Reserve Bank of New Zealand hiked interest rates by 0.50%. Meanwhile, Fed officials hinted that the bank would continue tightening even as data showed that the American economy was easing.