Market Update
- Posted by currencies in Bank of England, Budget, Dollar, Economy, EUR, Fed, GBP, Inflation, Sterling, UK, Uncategorised
- February 20, 2023
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To recap on Friday, we had four FED speeches, simply just talking about economic outlook of what’s yet to come they basically mentioned they are going to be more hawkish and there’s a need for further rate hikes which will further boost the dollar. The dollar hit a six-week high against many currencies as it battles the high inflation pressure, but employment figures remain strong.
When it comes to the next interest rate decision in March, they may look to a 25-basis point hike which was more than they initially expected as they mentioned they were going to pause rate hikes altogether.
As inflation is coming down in the US meaning that there is more increased confidence in the dollar which may suggest that a lot of traders are taking their position out of the dollar and moving it to more riskier currencies because the dollar has a lot of strength behind it. But saying that, we’re starting to see risk aversion take over which can trigger some safe haven flows for the dollar as concerns about the impact of higher rates on the economy is also weighing on risk sentiment, giving a further boost to the U.S. currency.
As for today, won’t see much movement in the markets due to US markets closed for Presidents Day But we have the Consumer Confidence flash for euro area where they will talk about inflation, they have made it clear that they expect euro zone rate to keep rising but the hawkish ECB comments aren’t likely to support euro, given the dollar strength.
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