The market reaction can be considered a clear end to the inflationary cycle. It is driven by recent economic indicators, such as the decrease in job creation and consumer confidence. It’s worth noting that this economic slowdown is not seen as an indication of an upcoming recession, which would necessitate interest rate cuts.
USD strengthened due to the increase in Treasury bond yields driven by strong economic data from the United States
Could Powell be a buyer Despite the Fed’s updated dot plot last week suggesting two more rate hikes may be in the works, market participants are finding it hard to believe. Federal Reserve Chairman Powell did not convince the market when he held a press conference after the decision. However, he will be given another chance to get his message across this week when he testifies before Congress on Wednesday and Thursday at 5:30 p.m. Tehran time. Will he wake up the US dollar?
The minutes to the 3 May FOMC meeting when it hiked rates by 25bp echo the comments we have been hearing from officials. “Some” members clearly think there is more work to do to constrain inflation, but “several” think they may have already done enough. The market pricing of a 30% chance of a June hike seems fair, but volatility looks set to continue
Gold has been unappealing to buyers for three weeks. Strong economic data and high inflation led to a drop in gold prices. For the third consecutive week, the price per ounce of gold fell, leading to renewed discussions of a June rate hike. This shift in interest rate projections is the primary explanation for the decrease in gold’s value.
The Japanese yen is in a tight buyer position, which could be the end of a 1-week rally for the US dollar. During this time, the yen fell and the day hit a six-month low.
Although the ounce of gold had a rough week, falling almost $50 and experiencing its worst performance since February, we saw a bullish return to the market on Friday.
US CPI Preview: Core CPI at 0.4% or lower monthly component gives stocks, and gold the chance to advance and the greenback.
Uncertainties increase the attractiveness of gold due to diminishing returns. Today’s gold movements are in stabilization mode. This is due to falling interest rates (due to US banking problems).
Today, the Federal Reserve will raise interest rates by 25 percent.
The probability of yen weakness is higher than its strength.
The first decision of the new Bank of Japan Governor Kazuo Ueda was carefully followed by traders. It will be no different from the recent decisions of the previous BOJ chief Haruhiko.
