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Markets rise ahead of the ECB forum and the end of the half year

Over the past week, Wall Street indices have won back the fall of the previous five-day trading period, which turned out to be the worst since March 2020, with the markets having a full-fledged rally on Friday. rose by 3.0%, jumped by 3.2%, and gained 2.6%.

Since the beginning of the week (abbreviated), the indices rose by 6.4%, 7.5% and 5.4%, respectively. After such a strong rebound, some investors wondered if it was possible to talk about bottoming, but given the growing risks of a recession, a return of bearish sentiment is almost certain. The recent rebound looks more like a bear market rally triggered by oversold conditions.

On Monday, US futures remain combative, ignoring updated IMF forecasts. Over the weekend, the fund downgraded the outlook for the US economy and now expects GDP growth for this year by 2.9% against the previous forecast of 3.7%. The IMF urged the central bank to quickly curtail stimulus, and also pointed to the intensity of domestic demand in the United States, which is fueling inflation around the world.

Asia rose everywhere at the beginning of the new trading week with an eye on Wall Street, and the players did not react to the sharp deterioration in the epidemiological situation in China (in Macau). The MSCI Regional Composite Index jumped nearly 2%, while China’s rose nearly 1%, Japan’s rose 1.43% and Hong Kong’s gained 2.11%.

trading near more than weekly lows, oscillating around 104.00. New attempts to grow the US currency are hampered by the demand for risk, combined with the faded dynamics of treasury yields. Last week, the USD failed to reach the 105.00 level, ending the session with moderate losses, which looks quite appropriate after three weeks of continuous growth.

This week the focus will be on the ECB forum in Portugal. In light of record inflation, investors will be especially curious to hear comments from the heads of the ECB, the Fed and the Bank of England.

At the end of the week, the eurozone will present an inflationary report that can make additional adjustments to the ECB’s rate expectations. It is also important that this week ends the second quarter and the first half of the year, which may cause bouts of volatility in the markets in connection with the adjustment of positions.

About author

Oxford graduate with honors. He worked in large financial projects for well-known Wall Street corporations. After he earned his first capital and a reputation as a successful trader, he opened his own company. At the moment, the growth of the company's capital is 20% per year.
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