The USD retreats in the FX market as global central banks adopt a more hawkish stance, signaling tighter monetary policy ahead. Rising oil prices and persistent inflationary pressures are pushing major economies to act, shifting interest rate expectations and influencing currency movements worldwide.
USD on the retreat as central banks sound hawkish
The USD was on the retreat against its counterparts in yesterday’s American session. Oil prices are high, and inflationary pressures in various economies are expected to accelerate forcing central banks to act. The release of BoE’s and ECB’s interest rate decisions yesterday, highlighted how other central bank’s may have even more hawkish intentions than the Fed. It’s characteristic that the Fed is expected to keep rates unchanged until the end of the year, while other central banks may raise rates two or three times in the same time frame. Also we note that we have no high impact US financial releases scheduled today which in turn may allow fundamentals to lead the markets.
Xcellence Research Team opinion
Should we the interest rate differential outlook on a monetary policy level being against the Fed even further in the coming days we may see the USD losing further ground. On the flip side any intensification of the market uncertainty, given the war in Iran may enhance safe market inflows for the USD and vice versa.
Oil prices seem to stabilise
Oil prices seem to stabilise over the past 24 hours, albeit Brent tends to show higher volatility. Market worries for the US war in Iran are still present despite efforts for a de-escalation. The US has announced that it may lift sanctions on some Iranian oil allready “in the water”. Yet Israel and Iran continued to launch more attacks on each other, deepening the crisis. Given the volatility of the situation in the war in Iran, we may see a new escalation over the weekend.
Xlence Research Team opinion
Should the war in Iran escalate further, enhancing market worries for the supply side of the international oil market we may see oil prices getting some support. On the flip side should market concerns for oil supply ease, we may see oil prices dropping.
US stock markets renew bearish tendencies
US stock markets albeit showing some signs of stabilisation yesterday, in today’s late European session seme to develop bearish tendencies. It seems that the prospect of the Fed maintaining rates high for longer could weigh on US equities further. At the same time the uncertainty of the war in Iran, with no end in sight currently, tends to provide headwinds for US equities as it could keep oil prices high for longer.
Xlence Research Team opinion
Should we see the risk off market sentiment intensifying over the American session today, we may see US equities retreating further. On the flip side, a more risk on approach could provide some support for US stock markets.
Gold’s price roll lower
Gold’s price rolled lower yesterday as some point even reaching as low as $4550/troy ounce, before correcting lower. It seems that the weakening of the USD may have allowed gold’s price to correct higher. Yet the upward movement and subsequent stabilisation of the precious metal’s price, is still substantially asymmetric to the weakening of the USD.
Xlence Research Team opinion
Overall, despite the stabilisation of gold’s price in today’s Asian and European sessions we still note a bearish market predisposition of the precious metal’s price at the current stage.
Disclaimer: This information is not considered investment advice or an investment recommendation, but instead a marketing communication.
