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Deutsche Bank: It expects the Federal Reserve to raise interest rates by 25 basis points in March 2027, having previously predicted rate hikes in September and December 2026.September 14th - According to the Financial Times, soaring oil prices will prompt a renewed debate within the Bank of England regarding whether to raise interest rates before the end of the year. Policymakers are preparing to meet later this week. The Monetary Policy Committee will convene to discuss key interest rates and the pace of balance sheet reduction. Meanwhile, a bond market sell-off is putting increasing pressure on Prime Minister Andy Burnhams government, with the budget due on October 28th. Market pricing indicates less than a one-in-three chance of a rate hike at Thursdays September policy meeting. However, renewed escalation of the Middle East conflict driving up energy prices, accelerating inflation, and relatively robust UK GDP growth are likely to intensify the internal debate within the Bank of England about how long the key interest rate can be maintained at 3.75%. Deutsche Bank economist Sanjay Raja stated, "The Bank of Englands patience may be running out, and the reasons for remaining on hold are slowly waning."On September 14th, according to The Daily Telegraph, former British Prime Minister Boris Johnson was traveling on a train from Ukraine to Poland when a Russian drone attacked a nearby railway line. Johnson was reportedly unharmed. According to the Ukrainian state-owned railway company Ukrzaliznytsia, former CIA Director David Petraeus was also on another train at the station where the attack occurred. Former Swedish Prime Minister Carl Bildt was also on the private train, traveling with other European diplomats. He stated that they were informed of the Russian drone attack on the following train. Ukrainian authorities stated that the attacked train was carrying 206 passengers. According to Ukrainian railway officials, the attack site was only 2 kilometers from the Polish border. This has raised concerns that Russian attacks are increasingly approaching NATO territory.September 14 - According to Reuters, Omans Energy Minister stated, "The Strait of Hormuz will be open. The current situation is likely only short-term. I am pleased that Oman can continue to produce oil and gas. Soaring oil and liquefied natural gas prices are unsustainable for everyone. The situation should stabilize in the medium term. We need to diversify export routes and identify alternative export options, whether through Oman or Yemen."Omans Energy Minister: We need to diversify export routes and find alternative export options, whether via Oman or Yemen.

With an eye on ECB policies, the US Dollar Index defends its recovery from a two-week low of 107.00

Daniel Rogers

Jul 21, 2022 11:40

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After recovering from a two-week low the previous day, the US Dollar Index (DXY) hovers at 107.05. In doing so, the dollar index reflects market trepidation before to a major monetary policy meeting of the European Central Bank (ECB). The day before yesterday, the DXY had its first daily rise in four days.

 

Market concerns about a European recession and strong inflation data from the UK and Canada may be to blame for the DXY's increase. The demand for safe haven assets such as the US dollar increased as a result of Sino-American tensions and China's covid problems.

 

Vladimir Putin, the president of Russia, reportedly said that it is unclear in what shape the Nord Stream 1 machinery would be returned after maintenance. According to Reuters, Ursula von der Leyen, president of the European Commission, said on Wednesday that a total suspension of Russian gas was a viable possibility. It should be highlighted that concerns over gas prices may have caused the International Monetary Fund (IMF) to decrease its growth forecasts for Germany. Because of this, the IMF projected Germany's growth to be 1.2 percent in 2002 and 0.8 percent in 2023. In a previous forecast, the IMF predicted that the German economy would grow by 2% per year. Along with the IMF, the Asian Development Bank (ADB) has lowered its forecast for growth in developing Asia from 5.2 percent to 4.6 percent for 2022.

 

Political worries in Italy also foreshadowed further misery for the EU and the markets. Consequently, Prime Minister Mario Draghi received a vote of confidence; but, because the vote was boycotted by the three major cotillion parties, Mr. Draghi may resign and call for early elections.

 

Wall Street ended the day with smaller gains in line with the mood, as the US 10-year Treasury yield halted rising after a two-day rise at about 3.03 percent. As a result, as of the time of publication, intraday S&P 500 Futures were down 0.25 percent at 3,952.

 

Moving forward, DXY traders can find some fun in the US Weekly Jobless Claims and July Philadelphia Fed Manufacturing Survey. However, as markets expect a greater rate hike than the 0.25 percent increase proposed the day before, the ECB's decision will draw a lot of attention. Therefore, in order to prevent the US currency from continuing its current recovery, ECB officials must not only announce the 25 basis point rate increase but also take further steps to win back the confidence of Euro bulls.


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