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September 18th - Nikkei futures extended gains as the yen weakened after the Bank of Japan raised its policy rate by 25 basis points to 1.25%, a move widely expected. The Bank of Japan stated that underlying inflation is approaching its 2% target and that it will closely monitor Middle East conflicts, the yens exchange rate, and demand for artificial intelligence. Investors are now focused on Governor Kazuo Uedas press conference later on Friday for clues about the pace of future rate hikes.Following the Bank of Japans interest rate hike, gains in benchmark 10-year Japanese government bond futures narrowed, with the latest increase being 0.22 yen.On September 18th, Goldman Sachs maintained its year-end gold price forecast of $5,400/oz. Goldman Sachs stated that while the latest US interest rate hike may slow golds rise, it will not change its long-term bullish outlook. In its report, Goldman Sachs expects "the impact of tighter monetary policy to primarily manifest as a slowdown in the short-term appreciation path of gold, rather than a decline in the final gold price"; the continued diversification of reserves by central banks remains the main structural driver for its bullish outlook on gold. Goldman Sachs pointed out that if the Federal Reserve adopts a more hawkish policy, gold may experience a more significant correction. If the Fed raises interest rates three more times this year and signals further increases in final interest rates, gold prices could fall to around $4,070/oz; however, with central banks continuing to purchase gold to support the market, gold prices are expected to rebound to around $4,200/oz by the end of 2026.On September 18th, Barclays revised its forecast for the Bank of Englands monetary policy, now expecting a 25 basis point rate hike in November. The bank stated that signals from Bank of England policymakers following Thursdays meeting indicated heightened concerns about inflation risks.AirAsia Group co-founder: The Middle East war cannot last much longer.

GBP/USD seeks to regain 1.2300 as higher UK CPI strengthens the case for a rate hike by the Bank of England and the USD retreats

Alina Haynes

Mar 23, 2023 15:00

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During the Asian session, the GBP/USD pair attempts to reclaim the resistance level at 1.2300. Following a vertical correction, the Cable has recovered to near 1.2260 as the market anticipates that the absence of hawkish interest rate guidance from Federal Reserve (Fed) chair Jerome Powell while addressing the economy at the monetary policy meeting indicates that the Fed is close to ending its policy-tightening spell.

 

S&P500 futures have generated some gains in the Asian session following a decline on Wednesday as a result of Fed Powell's confirmation that the fight against intractable U.S. inflation will continue. Chairman of the Federal Reserve Jerome Powell has ruled out rate cuts in 2023, citing the difficulty of controlling inflation. In addition, US Treasury Secretary Janet Yellen's statement that the government "does not plan to insure all uninsured bank deposits" heightened fears of a banking sector collapse.

 

Following a recovery move, the US Dollar Index (DXY) has retreated on expectations that additional credit tightening to protect banking institutions will reduce overall demand, economic activity, and inflation. In the interim, the demand for US government bonds has increased as a result of expectations that US Janet Yellen will end further policy restrictions and reduce support for all bank deposits.

 

On the front of the United Kingdom, the Pound Sterling is likely to maintain its strength as the Bank of England (BoE) is scheduled to raise rates for the eleventh consecutive time. Governor Andrew Bailey of the Bank of England is expected to raise interest rates by 25 basis points (bp) in response to rising food and non-alcoholic beverage prices, as well as rising energy costs, which have contributed to inflation in the United Kingdom.

 

In the midst of global banking turmoil, the Bank of England's (BoE) interest rate decision will be difficult, as policymakers were divided over whether to raise rates further or maintain them at their present level.


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