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Market Update

• Posted by Shyam Gokani in Bank of England, coronavirus, Dollar, Economy, EUR, Fed, GBP, Inflation, Sterling, UK, Uncategorised
• March 29, 2022
• No Comments

In the last 24 hours, we saw sterling steal the show weakening heavily against the euro and dollar by almost 1%. As for the reason, Gov Bailey from the Bank of England held a speech that further re-affirmed the same message of UK economic weakness received at the last policy meeting. A dovish central bank and low consumer confidence shifted the overall appetite away from the pound.

Risk-on or risk-off? With U.S equities closing fairly flat it’s hard to get a proxy on the market’s direction over the past day. However, two important data releases are coming out this week, PCE and Non-Farm Payroll. Both releases will be sure to jolt markets up again. It’s clear to see that the Fed will act swiftly and aggressively to combat inflation numbers following their policy meeting held last week. The message received by investors settled positively as the dollar held firmly and initial jobless claims came in lower than expected. Despite all the recent positive data, the likelihood of a recession triggered by monetary policy remains high.

Russia-Ukraine cease-fire talks are set to be initiated later this week with little to no actual bearings on where we are with talks to end the fight.

Crude’s biggest importer China has ordered Shanghai into lockdown, causing oil prices to plummet on fears that demand will dwindle for the commodity. Ports and major manufacturers, however, remain functional in Shanghai to offset even the slightest possibility of another global supply shortage which would be detrimental to inflation throughout the West.