2 May 2022

USD trades higher amid growth worries

USD trades higher on the back of safe haven flows amid fears over slowing global growth. Bets on rising U.S. interest rates, alongside doubts about growth in Europe and China, gave the safe-haven U.S. currency a boost.

author dp
Team INRBonds
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   USD trades higher on the back of safe haven flows amid fears over slowing global growth.

   The US economy unexpectedly contracted by -1.4% in the first quarter of the year, annualised, this was down from 6.9% growth in the last quarter of 2021. The reading was well below the expectation of 1.1% growth.

   The slowdown was largely attributed to rising imports and lower inventories rather than consumer spending which actually rose.

   US PCE, which is the Fed’s preferred measure of inflation rose to 6.6% against the expectation of 6.3% and up from 6.4% in February.

   INR traded marginally higher against the USD amid currency inflows ahead of the nation’s largest IPO in upcoming week.

   The state-owned insurance behemoth Life Insurance Corporation of India will launch its initial public offering on 4th May and the issue will close on 9th May.

   Oil prices held steady as Russian supply concerns were offset by a weaker demand outlook as China’s COVID picture deteriorates.

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