10.04.23 - 14.04.23
Results of the previous week
American indices managed to show moderate growth on the back of US inflation data. The indicator has fallen to 5%, its lowest point since June 2021. This means that the US Fed may be less aggressive in raising interest rates or even take a break in tightening its monetary policy. Interest rate projections were also reduced by recent problems in the banking sector.
Reduced projections for the Fed's interest rate put pressure on the dollar. The US currency suffered losses against the euro, which reached a yearly high. The British pound also moderately gained ground against the dollar. Price pressures in the UK are still high, and the Bank of England will probably be forced to maintain a tight monetary policy for longer.
Brent oil prices managed to gain a foothold above $85 a barrel but failed to continue the upward momentum. A decline in US inflation gives reason to hope that the Fed will halt interest rate hikes, which would increase oil consumption and buoy its price. OPEC+ production cuts are also a positive sign for oil. However, the increase in US commercial reserves is restraining the growth.
Key events of the current week
Germany. ZEW Indicator of Economic Sentiment
The euro is showing upward movement, but that doesn't mean that all is well in the region's economy. The GDP of Germany, the Eurozone's largest economy, is growing slower than expected. The country's unemployment level has reached its November 2022 level (5.6%). The economic sentiment of the last three months has consolidated in the positive zone, but it's still too early to predict a sunny future for the economy. As long as the indicator meets expectations, the euro can continue to rise.The EUR/USD pair could climb to 1.1155.
The UK. Inflation rate
The UK has suffered quite a bit from increased price pressure. And despite all measures taken by the Bank of England to fight price pressure, it's still not falling. Despite a fairly high interest rate, the country's economy is still afloat only because the regulator still has permission to act decisively. Given that inflation is at 10%, the Bank of England will continue hiking its rate to support the pound. If the inflation report meets expectations, GBP/USD could rise to 1.2630.
The US. New jobless claims
The US unemployment rate remains historically low, which allows the Federal Reserve to act fairly decisively for now in its fight against inflation. Meanwhile, however, the data released on 13 April shows that jobless claims rose higher than expected due to concerns that the labour market is slowing down. But if we look at things from the perspective of the Fed's actions, the increase in the number of jobless claims is more of a positive factor for the stock market. The US regulator is likely to take a break in rate hikes in case negative macro data is released. This could show support for gold. XAU/USD may move toward the historical high of 2075.00.