We witnessed one of the most significant sell-offs in recent market history last week, with stocks, crypto, and currencies bleeding. On Friday, we saw a slight bounce, which could signal the bottom is in, but could also signal a dead cat bounce, meaning we are heading back down further.
On a macro view, a recession is edging closer across the globe, and although CPI figures showed a slight decline for the USA, we can’t be sure inflation has peaked until the next reading. As the war continues to grid on and Oil prices keep rising, the cost of living is starting to pinch the majority, including retail investors.
For the UK, talks of Borris Johnson ripping up the parts of the Brexit deal for Northern Ireland could spark an EU trade retaliation and worsen the fragile economy further. We could see some more pressure on GBP pairs this week. The UK gov has also tried to shift the economic blame on the Bank of England, and MPs on the Commons treasury committee on Monday will grill rate-setters Andrew Bailey and co. This comes as UK CPI is expected to surge from 7% to 9.1% this Wednesday, the fastest rise in inflation since 1982.
Over in the US, Fed Chair Jerome Powell will be speaking on Tuesday, and he and his team will likely continue ahead with another 0.5pt interest rate hike in the next meeting. On Tuesday, we will also see US retail figures, which should show some resilience toward high prices and inflation, laying the ground for another interest rate hike.
On the other side of the globe, GDP figures for Japan are predicted to show a decline for the first quarter this Wednesday. JPY has been steadily losing ground against the dollar, peaking at around 131:1 last week.
In Europe, the EU may be cutting its growth prediction for 2022 and doubling its inflation expectations. ECB President Lagarde and the latest ECB minister are talking on Thursday.
A pandemic, high inflation and an ongoing war in Europe make this period unprecedented. Indeed it is a very volatile and challenging time to trade. If you would like advice on how best to hedge your capital and protect profits during turbulent times, don’t hesitate to contact one of our team below.
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