Strikes at GM, Ford and Stellantis factories dampened overall market sentiment on Monday. The walkout led by United Auto Workers (UAW) began last Friday and saw little progress.
GM, Ford and Stellantis fell yesterday. The barrel of US crude traded past the $92 level, as Brent crude advanced past $95pb.
This week, the US policymakers will certainly opt for a ‘hawkish pause’. The Fed will likely revise its growth expectations significantly higher on the back of resilient consumer spending and solid growth. The US dollar index tested the important 38.2% Fibonacci resistance last week, especially after the euro sold off following the ECB rate hike. The Fed announcement could push the US dollar index into the medium-term bullish consolidation zone.
If the Fed is not expected – not even a little bit – to hike rates this week, the Bank of England (BoE) could hike the bank rate by a final 25bp on Thursday. In Japan, not much is expected to change this week. Warnings from Japanese officials that a further yen selloff would spark a direct FX intervention slowed down but not reversed the JPY selloff. The USDJPY is trading just below the 148 level, with, sure, limited upside potential, and of course a good downside potential, waiting to be unlocked by a reasonably hawkish BoJ, and I don’t see that coming this week.
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