US Federal Reserve officials tried to temper expectations for looser policy, and Neel Kashkari said at a conference on Wednesday that the Central Bank is a long way from declaring victory. Kashkari also added that the Central Bank's proposal to cut interest rates early next year is unrealistic. In an interview with the Financial Times, San Francisco Fed President Mary Daly also warned that it is too early for the US Central Bank to "declare victory" in the fight against inflation. Amid such comments, stock indices fell slightly. At the close of the stock market yesterday, the Dow Jones Index (US30) added 0.08%, while the S&P 500 Index (US500) was down 0.07%. The NASDAQ Technology Index (US100) lost 0.58%.
The slowdown in US inflation may have opened the door for the Federal Reserve to soften the pace of the coming interest rate hikes, but policymakers left no doubt that they will continue to tighten monetary policy until price pressures are fully resolved. At this point, traders of federal funds futures contracts currently estimate a 66% chance of a 50 basis point hike and a 34% chance of a 75 basis point hike in September. Calling inflation "unacceptably high," Chicago Fed President Charles Evans said he thinks the Fed will probably need to raise the rates to 3.25-3.5% this year and 3.75-4% by the end of next year.
Equity markets in Europe traded yesterday without a single dynamic. German DAX (DE30) decreased by 0.05%, French CAC 40 (FR40) added 0.33%, Spanish IBEX 35 (ES35) gained 0.33%, British FTSE 100 (UK100) was down by 0.55%.
European futures on gas exceeded $2350 per thousand cubic meters. Energy carriers are getting more expensive amid unprecedented heat waves in Europe. High temperatures caused unexpected strain on the region's power grids, boosting the demand for electricity to power fans and air conditioners. Oil is in increasing demand in this environment as power plants seek alternatives to expensive gas. The International Energy Agency (IEA) raised its forecast for oil demand this year by 380,000 BPD. Normally, the IEA is negative on oil demand, but rising global natural gas prices may encourage more energy consumers to switch to oil for winter heating.
Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC), which usually does its best to boost oil prices, has lowered its forecast for global oil demand growth for 2022. OPEC said it expects oil demand to grow by 3.1 million BPD in 2022, down 260,000 BPD from its previous forecast. Goldman Sachs analysts again forecast an oil price above $130 a barrel by the end of the year.
Gold futures closed lower Thursday as a three-week rally in the precious metal's prices halted, and investors shifted their attention to the rising US stock market rather than safe-haven assets such as gold and the dollar.
The Latvian Saeima declared Russia a sponsor of terrorism. Earlier, the US Senate passed a resolution urging the State Department to recognize Russia as a state sponsor of terrorism because of the events in Ukraine, Chechnya, Georgia, and Syria. A ban on issuing Schengen visas to all Russians could be part of the seventh package of European sanctions against Russia. EU countries are now discussing the issue.
Asian markets were trading up yesterday. Japan's Nikkei 225 (JP225) was not trading due to the bank holiday, Hong Kong's Hang Seng (HK50) added 2.40%, while Australia's S&P/ASX 200 (AU200) ended the day up by 1.12%. But Asian stocks started declining at the open on Friday amid a new blockage in China. China's economy is still reeling from a series of economically devastating quarantine restrictions imposed earlier this year, and investors are wary of further such measures. Quarantine in a major commodity center such as Yiwu could cause further problems for China's industrial sector, which unexpectedly contracted in July.
S&P 500 (F) (US500) 4,207.27 −2.97 (−0.071%)
Dow Jones (US30) 33,336.67 +27.16 (+0.082%)
DAX (DE40) 13,694.51 −6.42 (−0.047%)
FTSE 100 (UK100) 7,465.91 −41.20 (−0.55%)
USD Index 105.19 −0.01 (−0.01%)
- – UK GDP (m/m) at 09:00 (GMT+3);
- – UK Industrial Production (m/m) at 09:00 (GMT+3);
- – Eurozone Industrial Production (m/m) at 12:00 (GMT+3);
- – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+3).
by , 2022.08.12
We advise you to get acquainted with the daily forecasts for the major currency pairs.This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
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