Prior to the Federal Reserve’s important Jackson Hole conference starting as the week unfolds, regulators continued to take a hawkish approach to monetary policy, which helped the US dollar reach strong gains today.
The indicator increased by over 2% the week before, its greatest weekly rise since April two years ago, helped by many officials from the Federal Reserve highlights the necessity for significant additional increases in interest rates to fight inflation that is surging at records not seen in 4 decades.
Interest rates in the United States have increased by 225 bps as of Q1 2022, but everyone will be watching Chairman Jay Powell in the symposium on August 25 for any indications of how high they may rise and for what extent of time they will have to remain there in order to increase the grip on inflation. The EUR/USD fell to 1.0027, losing 0.1% and heading for the low of the 5th successive week.
Gazprom declared a suspension of European oil shipments through the Nord Stream 1 pipeline for three whole days during the last week of August, pushing the already burdensome energy crisis to the edge. Following shocking the market with a 50 bps increase in interest rates in July, the European Central Bank (ECB) is anticipated to raise rates once more in the coming month.
As the region’s inflation expectation has not really changed, ECB Isabel Schnabel, a board member of the European Central Bank (ECB), stated last week that she supports an additional significant rate hike in September.
When the central bank of China lowered key lending rates, the USD/CNY pair climbed to its peak point in over 2 years, rising to 6.8271, by 0.1%. China increases loosening and lowering credit standards to bolster the country’s economic growth.
Consumer confidence in the UK fell to a historic low as worries of a downturn increased and inflation tightened household spending, and the GBP/USD currency pair dipped to 1.1824.
The BoE is anticipated to increase interest rates by 50 bps next month, pursuing its tightening of monetary policy. However, the BoE previously cautioned that the nation’s economy would probably encounter a protracted economic downturn in Q4, so this move is highly improbable to support the GBP.