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The Daily Exchange Rate: is 4,055KHR to the USD$
STOCKS SLIP, DOLLAR UP AS CHINA LOCKDOWNS STIR GROWTH RISKS.
Asian shares slid and the dollar hit two-decade peaks on Monday as U.S. stock futures extended their decline on rate worries, while a tightening lockdown in Shanghai stoked concerns about global economic growth and recession.
"A series of rate hikes and hawkish communication came against a backdrop of plummeting Chinese and European activity, new plans for Russian energy bans and continued supply-side pressures," warned analysts at Barclays.
Chinese trade data for April were not quite as bad as feared, with exports up 3.9% on the year and imports flat.
However, there was no let-up in China's zero-COVID policy with Shanghai tightening the city-wide COVID lockdown for 25 million residents.
S&P 500 stock futures led the way with a drop of 1.1%, while Nasdaq futures shed 1.0%. U.S. 10-year bond yields edged up to a fresh top at 3.15%.
EUROSTOXX 50 futures fell 1.5% and FTSE futures 0.7%.
MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 1.3%, and Japan's Nikkei (.N225) 2.4%. Chinese blue chips (.CSI300) eased 0.8%, while the yuan touched another 18-month low to trade at 6.7049 per dollar.
Investors were also tense ahead of the U.S. consumer price report due on Wednesday where only a slight easing in inflation is forecast, and certainly nothing to prevent the Federal Reserve from hiking by at least 50 basis points in June.
Core inflation is actually seen rising by 0.4% in April, up from 0.3% the previous month, even as the annual pace dips a bit due to base effects.
"In Q1, the annualised monthly change in core CPI was 5.6%," noted analysts at ANZ. "That is too high for the Fed and we think the FOMC won't be relaxed about inflation until the core number moderates to around 0.2% m/m on a sustained basis.
"The Fed is not the only central bank facing inflation pressures. Increasingly, the guidance from the ECB is becoming a lot more hawkish."
Fed fund futures are priced for rates reaching 1.75-2.0% in July, from the current 0.75-1.0%, and climbing all the way to around 3% by the end of the year.
BITCOIN FALLS TO LOWEST SINCE JANUARY, IN LINE WITH TUMBLING STOCK MARKETS.
Bitcoin fell to its lowest level since January on Monday as slumping equity markets continued to hurt cryptocurrencies, which are currently trading in line with so-called riskier assets like tech stocks.
Bitcoin dropped to as low as $33,266 in morning trade, testing the January low of $32,951. A fall below that level would be it lowest since July last year.
It then steadied to trade around $33,500, down 1.4%.
"I think everything within crypto is still classed as a risk asset, and similar to what we've seen with the Nasdaq, most crypto currencies are getting pummelled," said Matt Dibb, COO of Singapore-based crypto platform Stack Funds
The tech heavy Nasdaq (.IXIC) fell 1.5% last week, and has lost 22% year to date, hurt by the prospect of persistent inflation forcing the U.S. Federal Reserve to hike rates despite slowing growth. Nasdaq futures were down a further 0.8% in Asia trade on Monday morning. MKTS-GLOB
Dibb said other factors in the decline over the weekend - bitcoin closed on Friday around $36,000 - were the crypto market's notoriously low liquidity over the weekends, and also short lived fears that algorithmic stablecoin called Terra USD (UST) could lose its peg to the dollar.
Stablecoins are digital tokens pegged to other traditional assets, often the U.S. dollar.
UST is closely watched by the crypto community both because of the novel way in which it maintains its 1:1 dollar peg, and because its founders have set out plans to build a reserve of $10 billion worth of bitcoin to back the stablecoin, meaning volatility in UST could potentially spill over into bitcoin markets.
