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Market analysis

MARKETS WEEK AHEAD

Related product: Forex,Stock

Market analysis: Market sentiment roared higher this past week. On Wall Street, futures tracking the Nasdaq 100 soared 7.28%, the best 5-day performance since March. This is as S&P 500 and Dow Jones futures gained 6.76% and 6.39% respectively, the most since November 2020. Things were also looking good in Europe where the DAX 40 climbed 3.44%. The Hang Seng Index pushed up 2.89%. Virtually all G10 currencies outperformed against the US Dollar, including the New Zealand Dollar, Australian Dollar, Euro, British Pound, Canadian Dollar and Japanese Yen. The DXY Dollar Index is down 1.32% over the past two weeks, the most since April 2021. What could explain this dynamic? Look no further than the Federal Reserve. In recent weeks, we have seen the markets materially pull back 2023 Fed rate hike expectations. Cautious commentary from the central bank has been cooling chances of a 50-basis point rate hike in September. It seems traders have been shifting their focus from concerns about inflation to recession. Data since early May hints that markets are seeing the Fed increasingly fall behind on tackling CPI one year out. This has been resulting in a broad decline in Treasury yields. The combination of this and a weaker US Dollar has also been benefiting gold prices. Now, in the week ahead, all eyes will be on non-farm payrolls on Friday. Could the markets be getting ahead of themselves? Jobs creation is expected to slow, but the unemployment rate and wages are seen to remain robust. Outside of the world’s largest economy, the Bank of Canada is expected to deliver a 50-basis point rate hike on Wednesday. Australia releases its first-quarter GDP figures. China will also be closely watched for its May manufacturing PMI data. Softer data could amplify concerns about a slowing global economy, perhaps pressuring the Yuan. What else is in store for markets ahead

2022-05-30 01:35 Nigeria

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Market analysis

THE ROLE OF CENTRAL BANKS IN THE FOREX MARKET

Related product: Forex

Market analysis: THE ROLE OF CENTRAL BANKS IN THE FOREX MARKET Central banks are mainly responsible for maintaining inflation in the interest of sustainable economic growth while contributing to the overall stability of the financial system. When central banks deem it necessary they will intervene in financial markets in line with the defined “Monetary Policy Framework”. The implementation of such policy is highly monitored and anticipated by forex traders seeking to take advantage of resulting currency movements. This article focuses on the roles of the major central banks and how their policies affect the global forex market. WHAT IS A CENTRAL BANK? Central Banks are independent institutions utilized by nations around the world to assist in managing their commercial banking industry, set central bank interest rates and promote financial stability throughout the country. Central banks intervene in the financial market by making use of the following: Open market operations: Open market operations (OMO) describes the process whereby governments buy and sell government securities (bonds) in the open market, with the aim of expanding or contracting the amount of money in the banking system. The central bank rate: The central bank rate, often referred to as the discount, or federal funds rate, is set by the monetary policy committee with the intention of increasing or decreasing economic activity. This may seem counter-intuitive, but an overheating economy leads to inflation and this is what central banks aim to maintain at a moderate level. Central banks also act as a lender of last resort. If a government has a modest debt to GDP ratio and fails to raise money through a bond auction, the central bank can lend money to the government to meet its temporary liquidity shortage. Having a central bank as the lender of last resort increases investor confidence. Investors are more at ease that governments will meet their debt obligations and this heps to lower government borrowing costs.

2022-05-26 20:21 Nigeria

1

Reply

MarketMARKETS WEEK AHEAD

Related product: Forex,Stock

Market analysis: Market sentiment roared higher this past week. On Wall Street, futures tracking the Nasdaq 100 soared 7.28%, the best 5-day performance since March. This is as S&P 500 and Dow Jones futures gained 6.76% and 6.39% respectively, the most since November 2020. Things were also looking good in Europe where the DAX 40 climbed 3.44%. The Hang Seng Index pushed up 2.89%. Virtually all G10 currencies outperformed against the US Dollar, including the New Zealand Dollar, Australian Dollar, Euro, British Pound, Canadian Dollar and Japanese Yen. The DXY Dollar Index is down 1.32% over the past two weeks, the most since April 2021. What could explain this dynamic? Look no further than the Federal Reserve. In recent weeks, we have seen the markets materially pull back 2023 Fed rate hike expectations. Cautious commentary from the central bank has been cooling chances of a 50-basis point rate hike in September. It seems traders have been shifting their focus from concerns about inflation to recession. Data since early May hints that markets are seeing the Fed increasingly fall behind on tackling CPI one year out. This has been resulting in a broad decline in Treasury yields. The combination of this and a weaker US Dollar has also been benefiting gold prices. Now, in the week ahead, all eyes will be on non-farm payrolls on Friday. Could the markets be getting ahead of themselves? Jobs creation is expected to slow, but the unemployment rate and wages are seen to remain robust. Outside of the world’s largest economy, the Bank of Canada is expected to deliver a 50-basis point rate hike on Wednesday. Australia releases its first-quarter GDP figures. China will also be closely watched for its May manufacturing PMI data. Softer data could amplify concerns about a slowing global economy, perhaps pressuring the Yuan. What else is in store for markets ahead

DAILYFX

2022-05-30 01:35

MarketTHE ROLE OF CENTRAL BANKS IN THE FOREX MARKET

Related product: Forex

Market analysis: THE ROLE OF CENTRAL BANKS IN THE FOREX MARKET Central banks are mainly responsible for maintaining inflation in the interest of sustainable economic growth while contributing to the overall stability of the financial system. When central banks deem it necessary they will intervene in financial markets in line with the defined “Monetary Policy Framework”. The implementation of such policy is highly monitored and anticipated by forex traders seeking to take advantage of resulting currency movements. This article focuses on the roles of the major central banks and how their policies affect the global forex market. WHAT IS A CENTRAL BANK? Central Banks are independent institutions utilized by nations around the world to assist in managing their commercial banking industry, set central bank interest rates and promote financial stability throughout the country. Central banks intervene in the financial market by making use of the following: Open market operations: Open market operations (OMO) describes the process whereby governments buy and sell government securities (bonds) in the open market, with the aim of expanding or contracting the amount of money in the banking system. The central bank rate: The central bank rate, often referred to as the discount, or federal funds rate, is set by the monetary policy committee with the intention of increasing or decreasing economic activity. This may seem counter-intuitive, but an overheating economy leads to inflation and this is what central banks aim to maintain at a moderate level. Central banks also act as a lender of last resort. If a government has a modest debt to GDP ratio and fails to raise money through a bond auction, the central bank can lend money to the government to meet its temporary liquidity shortage. Having a central bank as the lender of last resort increases investor confidence. Investors are more at ease that governments will meet their debt obligations and this heps to lower government borrowing costs.

DAILYFX

2022-05-26 20:21

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