The European Central Bank (ECB) has raised interest rates by 25 basis points, marking its tenth consecutive rate hike since July 2022 and bringing the total increase to 450 basis points. The ECB is primarily concerned about high inflation levels, both current and projected, with concerns extending into the future.
Recession: "The Worst is Yet to Come" - IMF Chief Economist
2022-12-29 • Updated
Last week, Pierre-Olivier Gourinchas, the IMF's chief economist, commented on the IMF's global economic outlook, stating clearly that the worst was yet to come. For many people, he opined that the year 2023 would feel like a recession.
The IMF has also warned of an irregular repricing in markets which has led to the conclusive increase in global financial stability risks, which may spread and spill over into other markets due to the combined pressures from food crises, war-driven energy costs (scarcity), inflation, and higher interest rates, thus, driving the world closer to a global recession.
Outlook for Traders
As of 13th October 2022, world stocks dipped nearly below the 2-year low, with the Japanese yen slipping even lower to the 1998 lows. OPEC has decided to cut down on oil production, which could raise oil prices to new highs, hastening a possible global recession.
What to Trade
In times like these, more investors and commercial banks will be leaning towards safe-haven commodities in hopes of capital preservation rather than growth. Thus, there could be more bullish movements on assets like XAUUSD and OIL.
All eyes are on XAUUSD for a possible breakout and retest of the descending channel which should signal the start of a bullish rally.
The upcoming August inflation data may send mixed signals. The 12-month headline inflation rate is expected to rise to 3.6%, causing concerns for the Biden administration. However, core inflation, which excludes food and energy prices, is projected to decrease to 4.3%, aligning with the Federal Reserve's goals. Past price trends influence both figures, so looking at recent data for a more accurate picture is crucial.
Here we go again, my friends. It’s time to look critically into the future of what trading opportunities September might have in store for us. As always, it is essential to note that the views expressed here are mine and should not be considered financial advice without proper examination.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.