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Fed raises rates, but no longer higher, for longer

This post was originally published on jpfs.com

Last week the Fed was faced with the decision of what to do with rates. Containing pressure on US banks was being offset by inflationary pressures. On the day the Fed raised rates by 25bps giving a soft dovish message alongside it. The banking sector remained in turmoil with Credit Suisse being acquired by UBS and the focus shifting to the next weakest Deutsche.

The Euro was supported by a continued hawkish ECB with the single currency gaining 0.9% vs the USD and 0.5% vs the GBP.

 

The GBP ground higher as inflation surprised to the upside 0.5% higher than previous release at 10.4%. The week also saw the BoE raise interest rates by a further 25bps as expected with a7-2 split.

 

Commodity currencies had a mixed week as oil and risk remains volatile on a day-to-day basis. The AUD and NZD bot fell around 1% while the CAD remained flat as oil regained some ground.

 

Oil lost remained volatile. WTI made up some of its recent losses with a 4.5% rally to trade just below the $70 level.

 

The week ahead should be quieter from a data perspective as most of the interest rate decisions are now out of the way, but market worries continue to persist. the DB worries that emerged on Friday remain and it will be a difficult task to regain confidence.

Data wise we have GDP from the US and UK and inflation numbers from the Eurozone.

Weekly Majors Market Performance

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