Spreadex Market Update
Volatility Rises as Powell Shakes Things Up
Equities Shaken by Powell Comments
Equities prices were seen lower across the board yesterday as traders digested Powell’s comments. The prospect of more aggressive action from the Fed was felt across the globe though the Nikkei has since reversed sharply higher to break out to fresh highs as JPY fell sharply against USD. US stocks have been hit hard by the upside in the Dollar with the Nasdaq now down around 3% from last week’s peak.
GBP Plunges on Fed/BOE Divergence
The fresh rally in USD has caused seismic shifts across FX markets into the middle of the week. GBP has been the biggest loser so far, falling more than 2% against USD as fresh monetary policy divergence opens up between the Fed and the BOE. The BOE has recently signalled that, with inflation having peaked, rates might not need to move any higher, making GBP a good candidate for shorting against USD should the current Dollar rally continue. Further testimony from Powell today will be closely watched by traders consequently.
BOC to Hold Steady
The BOC meeting today might pave the way for a further move higher in USDCAD. With Canadian inflation having fallen last month, in contrast to the US, there is little to suggest the BOC will deviate from keeping rates on hold and signalling a continued hold near-term, which should see CAD lower.
Metals & Crude Turn Lower
In the metals and commodities space, both gold and silver were hit hard by fresh USD strength yesterday. Gold prices dropped around 2%, now down around 3% from the week’s highs while silver prices plunged by over 5% on the day to hit their lowest levels since November. Crude prices were similarly hurt yesterday with futures dropping around 4.5% as they reversed from the week’s highs. Today, the market waits on the latest update from the EIA which is forecast to record a further 1.3 million barrel surplus. If seen crude prices will likely come under fresh pressure given the backdrop.
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