BoE in focus after hawkish Fed

Frank Walbaum

Important news this week

Thu, 30th Jul, 13:00 CET UK BoE Interest Rate Decision.
Thu, 30th Jul, 14:30 CET US PCE Price Index.
Fri, 31st Jul, tentative JP BoJ Interest Rate Decision.

Hawkish Fed shakes markets despite a softer Dollar

Markets reacted cautiously following the latest FOMC meeting. While the US Dollar weakened after the announcement, the Federal Reserve maintained a hawkish stance, stressing that inflation remains too high and that interest rates may need to stay restrictive for longer. Policymakers continued to emphasize their data-dependent approach, signalling that easing policy is not imminent despite signs of moderating economic growth.
Equity markets sold off as investors reassessed the outlook for higher borrowing costs and tighter financial conditions. Most major FX pairs strengthened against the weaker Dollar, although the Australian Dollar underperformed as fading risk sentiment weighed on commodity-linked currencies. Gold and Silver also lost ground, with broad risk-off flows encouraging investors to reduce exposure across several asset classes despite the softer Dollar. Meanwhile, oil prices continued to move higher, supported by persistent geopolitical tensions and expectations that supply risks could remain elevated.

Market talk

Today's focus shifts to the Bank of England's interest rate decision, where markets widely expect rates to remain unchanged. While the decision itself is unlikely to surprise, traders will closely monitor the BoE's statement and Governor Bailey's comments for clues on inflation, wage growth, and the timing of future policy changes. Following the hawkish Fed, any indication that the BoE also intends to keep rates higher for longer could provide additional support for Sterling. Investors will continue to monitor incoming inflation and labor market data, while oil prices and geopolitical developments remain key drivers of overall market sentiment.

Tendencies in the markets

Equities weaker, USD weak, crypto sideways, oil stronger, Silver weak, Gold weak.

Author

Frank Walbaum

AUD/USD keeps range near mid-0.7100s as USD bulls await US CPI

AUD/USD steadies near mid-0.7100s in the Asian session on Friday, stalling the previous day's sharp decline to an over one-week low. The August PPI report reaffirmed Fed rate-hike bets and boosted the US Dollar on Thursday, which weighed heavily on the pair. However, hawkish RBA expectations limited losses for the Aussie as USD bulls now await the release of the US consumer inflation figures before placing fresh bets.

USD/JPY holds lower ground toward 154.00; looks to US CPI

USD/JPY holds lower ground toward 154.00 in the Asian session on Friday after hot Japanese PPI data bolster a more hawkish BoJ repricing and provide fresh impetus to the Japanese Yen. However, the downside appears capped as the US Dollar preserves overnight gains ahead of the latest US consumer inflation data.

Gold: Gains remain capped by $4,400

Gold regains composure and trades with decent gains on Friday, managing to refocus attention on the $4,440 mark per ounce troy. Therefore, the precious metal reverses Thursday’s decline as the US Dollar alternates gains with losses at the end of the week.

Ripple Price Forecast: XRP extends decline as returning ETF inflows fail to lift outlook

Ripple (XRP) falls below $1.33 on Friday, marking the third consecutive day of declines. The token continues to track the broader cryptocurrency market downturn, with investors closely monitoring heightened macroeconomic uncertainty ahead of the United States (US) Consumer Price Index (CPI) release and next week’s Federal Reserve (Fed) monetary policy decision.

Weekly focus – The hawks set the tone

Risky assets came under pressure this week as energy prices kept creeping higher and the ECB surprised the markets with a hawkish tone. The price of Brent crude touched USD 110 per barrel on Thursday night, highest since mid-May, as news emerged that the Yemeni Houthis had reached control of key port cities and islands near the Bab el-Mandeb strait.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.