Wednesday's Federal Open Market Committee outing saw the US central bank make several notable changes to its language whose overall bias was to the hawkish side. Growth, for instance, was cited as 'solid' rather than 'moderate' and the overall sense from the Fed was that the US economic recovery is on track.
While the meeting's impact on equities, forex, and commodities was limited, Saxo Bank head of Equity Strategy Peter Garnry says that things could prove very different for emerging markets if the Fed holds to its hawkish policy outlook, including two more rate hikes this year.
"The trajectory here is painful for emerging markets," says Garnry, who also cautions that equities could take a post-Fed hit from President Trump's planned tariff announcement into this weekend.
Up today is the European Central Bank, and the big question here is whether it will offer guidance on its QE tapering plans or whether it will wait until its July meeting to make the announcement with six more weeks of data under its belt.
"The expectation here is that QE will last until year-end," says Garnry.
Saxo Bank Head of Commodity Strategy Ole Hansen reports that silver is one asset to watch into the ECB session as it is challenging resistance above $17/oz. Gold, meanwhile, remains "glued to $1,300/oz" with inflation expectations and trade fears providing support.
"$1,308/oz remains the upside level to watch in gold," says Hansen.
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.
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