The Euro, The Aussie Gain On Hawkish Central Bank Expectations, Crude Oil Under Pressure
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US equities first struggled to find direction, as the Federal Reserve (Fed) Chair Jerome Powell kept mum on monetary policy in Stockholm yesterday, worried about the World Bank’s morose growth projections, but then turned north on hope that a softer US inflation print tomorrow could boost the Fed doves and enhance appetite in US equities.
Gold
Gold benefits from softer US yields, and softer dollar on expectation that a softer inflation could soften the Fed’s policy stance.
World Bank
The World Bank predicts a global growth of about 1.7% this year, about half the pace it predicted last summer.
Although the slowing economic growth softens the rate expectations – and boost equities, a weaker global economy should weigh on corporate profits and should not let the rally run too far.
Forex
In the FX, European Central Bank (ECB) officials stand behind their hawkish view despite the latest softening in inflation. The EURUSD pushes higher as the positive pressure is the fruit of the divergence between softening Fed expectations and hawkish ECB bets.
Australia
In Australia, inflation advanced more than expected to 7.3% in Q4 fueling the expectation that the Reserve Bank of Australia (RBA) could opt for another 25bp hike in its February meeting.
Energy
Finally, in energy, crude oil is dragging its feet below the $75 this morning and will likely remain under pressure as yesterday’s API data showed that the US oil inventories rose by a little less than 15 mio barrels last week as the refining activity returned to normal following weather-related shutdowns.
Watch the full episode to find out more!
- 0:00 Intro
- 0:23 Stocks rallied on softer US inflation bets
- 1:58 ‘Be careful what you wish for!’
- 3:20 World Bank cuts growth forecasts…
- 3:53 … but Goldman calls off the Euro recession!?
- 5:48 Euro, Aussie gain on hawkish central bank expectations
- 6:55 Crude oil under pressure on 15-mio US stockpile build
- 7:34 Gold benefits from softer dollar, yields
- 7:56 Microsoft could be on a good path with ChatGPT!
Ipek Ozkardeskaya
Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020.
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