Currencies

Despite the surprise 50bps hike, market interpretation of relative central bank aggressiveness will be critical in the EURUSD direction

The central bank raised rates for the first time in eleven years today, opting for a bolder 50 basis points, against its previous forwards guidance for a more modest move

The USDOLLAR has pulled back, but this may be a dip in the uptrend.

CPI Inflation accelerated 9.4% y/y in June as today’s data showed, aggravating cost-of-living fears, while the Pound consolidates it recent gains against the greenback

A Reuters report suggests that officials of the European Central Bank will discuss about raising rates by 25 or 50 bps, which sends the pair higher, whereas bets for an outsized move by the Fed cool down

The pair starts the week on the offensive, helped by supportive BoE commentary and the greenback's slide, as market expectations around the Fed settle down

Two prominent hawks poured cold water on market bets for 1% rate increase and the pair backs-off today, from Thursday’s twenty-four year highs

The weekly gold charted a series of lower peaks (LP) followed by lower troughs (LT). Thus, XAUUSD is trending down on a primary basis. Therefore, in our view, the week of Monday, 18 April (black dashed vertical) was a critical period (T1) for the precious metal, marking its first LP.

Wednesday’s new inflation surge in the US has led to a hawkish repricing by markets for the Fed’s next rate move, but the pair shows resiliency and tries to defend parity

The BoC surprised with a 100bps hike. The market was expecting 75bps, which was already a pivot from an earlier expectation of 50bps.

A policy cannot deal with the supply shocks impacting the economy. Market participants are aware of this and will continue looking for a return commensurate with the heightened risk. In this environment of uncertainty, the price is still adjusting. Thus it seems, for the time being, they may have settled on "cash is king."