Very Dramatic Moves In Forex Markets With The Euro (EUR) And The Pound (GBP)
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The FX markets kick off the week on an extremely chaotic note. Both the pound and the euro are being severely punished for the political decisions that are taken in the UK and in Italy respectively.
Elections in Italy
As expected, the far-right candidate Giorgia Meloni won a clear majority in Italy at yesterday’s election, with Brothers of Italy gaining more than 25% of the votes. And Meloni’s right-wing alliance with Salvini’s League and Berlusconi’s Forza Italia got around 43% of the votes: the terrible consequence of the pandemic, the war and the energy crisis.
Situation the major currency
The EURUSD has been shattered this morning. The pair dived to 0.9550.
But it’s almost worst across the Channel, if that’s any consolation. Investors really hated the ‘mini budget’ announced in UK last Friday. Investors were expecting to hear about a huge spending package from Liz Truss government, but the package has been even HUGER than the market expectations.
UK’s 10-year yield jumped more than 20% since last week, the FTSE dived near 2% and Cable tanked below 1.0350 in Asia this morning.
Elsewhere, the US dollar index took a lift, and the dollar index is just crossing above the 114 mark at the time of talking.
Stock market Outlook
Gold dived to $1626 on the back of soaring US dollar.
US crude oil plunged below $80 per barrel.
The S&P500 fell to the lowest levels since this summer, whereas the Dow Jones fell below the summer dip.
Happily, the European equities are better bid this morning, but investors remain tense and worried.
Watch the full episode to find out more!
- 0:00 Intro
- 0:24 Italy turns right, euro gets smashed
- 4:15 UK assets treated like EM after the ‘MINI’ budget
- 7:45 USD rallies, XAU, oil under pressure
- 8:49 US stocks dive to, or below summer lows on Fed fear
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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