Recession fears are decreasing. Russia defaulted :: InvestMacro

by just forex

On Monday, the US dollar fell slightly from a 20-year high hit earlier this month. This came on the heels of positive US economic data that dampened expectations of an interest rate hike by the Federal Reserve. At the same time, stock indices have also shown weakness, but usually, when the dollar index goes down, the indices go up.

At the close of trading on Monday, the Dow Jones (US30) lost 0.20%, and the S&P 500 (US500) lost 0.30%. The Nasdaq Tech Index (US100) was down 0.72% yesterday. At the end of the day, all three indicators were down.

Goldman Sachs says the US price market is reducing the risk of a recession. While market expectations for the fed funds rate have been pushed back in recent weeks to levels with “limited downside potential in early 2023, 2024 fed funds pricing is likely to reduce downside risks,” analysts said. According to expectations implied through interest rate swaps, the Fed’s policy rate will peak at 3.60% by March 2023, up 2% from current levels.

Stock markets in Europe were trading flat yesterday. Germany’s DAX (DE30) rose 0.52%, France’s CAC 40 (FR 40) fell 0.43%, Spain’s IBEX 35 (ES35) lost 0.02%, and Britain’s FTSE 100 (UK100) closed Monday with a 0.69% increase.

Prime Minister Boris Johnson said on Monday Britain could make unilateral changes to Northern Ireland’s trade rules after Brexit this year. The European Union describes the move as illegal.

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Russia’s first major international underdevelopment in more than a century became a reality on Monday. This was followed by months of coordinated Western sanctions that left Moscow with cash but blocked access to an international financial network.

Oil jumped 2% yesterday amid rumors that a G7 decision against Russia will lead to further supply cuts. The Saudi-led OPEC+ alliance also cut its expected surplus in the oil market in 2022 to 1 million barrels per day from a previous estimate of 1.4 million. Some oil investors are reluctant to open big positions after the US Energy Information Administration said the weekly inventory report will be delayed for the second week in a row due to server problems. The EIA’s weekly oil report was not released on June 24 and likely not on June 29.

G7 leaders have warned that Russian President Vladimir Putin will be held accountable for a gruesome and deadly attack on a crowded shopping mall in Ukraine. According to President Vladimir Zelensky, at least 1,000 shoppers were in the mall when a Russian missile hit it, making it “one of the most devastating terrorist attacks in the history of Europe.” At least 18 people were killed and more than 40 injured. It is difficult to determine the number of casualties as rescuers continue to search through the rubble. With a high probability, Russia will be declared a sponsor of terrorism in the near future.

Asian markets were trading higher on Monday. Japan’s Nikkei 225 (JP225) is up 1.43%, Hong Kong’s Hang Seng (HK50) is up 2.35% on the day, and Australia’s S&P/ASX 200 (AU200) is up 1.94%.

Earlier this month, the Bank of Japan may have incurred a 600 billion yen ($4.4 billion) unrealized loss in Japanese government bonds as a widening gap between domestic and foreign monetary policy pushed up yields and prices. Despite this, the Bank of Japan continues to maintain its monetary policy soft as policy makers attribute higher inflation to higher energy and commodity prices. More and more analysts are beginning to believe that at some point, the Bank of Japan will intervene in the currency, as the weak yen is taking a heavy toll on the Japanese economy. Both BoJ Governor Kuroda and Prime Minister Kishida of Japan acknowledged this point.

S&P 500 (F) (US500) 3900.11 11.63 (−0.30%)

Dow Jones (US 30) 31,438.26 −62.42 (0.20%)

DAX (DE40) 13,186.07 +67.94 (+0.52%)

FTSE 100 (UK100) 7258.32 +49.51 (+0.69%)

US dollar index 103.98 -0.21 (-0.20%)

Important events for today:

  • – FOMC member Williams speaking (monthly) at 01:30 (GMT +3);
  • – European Central Bank President Lagarde speaks at 11:00 (GMT +3);
  • – US Consumer Confidence Index (m/m) at 17:00 (GMT +3).

by just forex

This article reflects a personal opinion and should not be construed as investment advice and/or a continuing offer and/or solicitation to carry out financial transactions and/or guarantee and/or anticipation of future events.

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