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December 3rd - A research report from CICC stated that golds rapid rise since the beginning of the year has exceeded levels commensurate with fundamentals, potentially leading to increased volatility in the future. However, considering the Federal Reserve is still in a rate-cutting cycle and the dollars credibility has been damaged, we believe the gold bull market is not yet over and recommend maintaining an overweight position, increasing holdings on dips.On December 3rd, a research report from CICC stated that considering the possibility of a shift in the pace of interest rate cuts by the Federal Reserve in 2026, we expect increased volatility in dollar liquidity and the market environment after the December FOMC meeting. On the one hand, weak US growth and employment data, along with speculation about the next Fed chair, may push up expectations for rate cuts. On the other hand, inflation concerns among current Fed officials will suppress expectations for rate cuts. Therefore, we believe that the certainty of an easing trade is higher in early December, which is more favorable for the performance of various assets. Entering mid-to-late December, although global assets often experience a "Christmas rally," i.e., a temporary strengthening of risk assets such as US stocks and commodities, we believe that uncertainty will be relatively high this year.According to the New York Times, the United States has suspended processing all immigration applications submitted earlier this year by immigrants from 19 countries whose entry restrictions were imposed.On December 3, Colombian President Petro Petro warned on social media against threatening Colombian sovereignty, stating that "violating our sovereignty is tantamount to declaring war," in response to US President Trumps December 2nd claim that Colombia might be "attacked" due to its drug problem. Earlier that day, Trump told reporters at a White House cabinet meeting that drug labs in Colombia manufacture cocaine and sell it to the United States, and that any country that "traffickles drugs" to the US would be "attacked."Reserve Bank of Australia Governor Bullock: Be wary of accumulating inflationary pressures.

Despite the Bank of England's less hawkish forecasts, GBP/USD is expected to rise beyond 1.2170

Daniel Rogers

Aug 04, 2022 11:52

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The GBP/USD pair has showed a modest retreat after failing to reclaim the 1.2170 resistance level. As the US dollar index (DXY) is projected to extend losses below 106.30, the upside stays favored. After a good fall to the round-number support around 1.2100, the asset has resumed its general uptrend.

 

As investors await the Bank of England's monetary policy decision, the cable might exhibit some volatility in the near future (BOE). In consideration of market expectations, BOE Governor Andrew Bailey will raise interest rates to 1.75 percent as a second successive 50 basis point (bps) increase is anticipated.

 

No one could dispute the reality that households in the United Kingdom are suffering tremendous pricing pressures. The inflation rate has risen to 9.4 percent, and there have been no indicators of a peak as of yet. The rate of inflation might reach double digits if the rate of price growth continues to accelerate, and families will be forced to pay more for identical quantities.

 

Well, a 50 basis point rate boost is insufficient to battle the inflation monster. However, dismal growth estimates and a decrease in the Labor Cost Index prevent the BOE from sounding excessively hawkish.

 

On the dollar front, the US dollar index (DXY) is experiencing uncertain movement as the visit to Taiwan by US House Speaker Nancy Pelosi has exacerbated protracted Sino-US tensions. The United States has held the global leadership position for a considerable amount of time, and China is keen to take over. Therefore, the United States' backing for Taiwan, a country with enormous technical potential, has exacerbated tensions between the United States and China.


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