Over the past week we encountered several important events, including a 75 basis point increase in the Fed’s key rate, a decline in the price of gold, and concerns by the Central Bank of Japan (BoJ) over the cheapening yen.
We have a lot to cover, so we have a weekly roundup of the most interesting economic events as well as NAGA events for you.
So, let’s dive into this week’s ending 👇🏻
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Fed raises interest rates by 0.75 points to fight inflation
The Federal Open Market Committee (FOMC) raised the target range for the federal funds rate by 75 basis points, or 0.75 percentage points, at its meeting on Sept. 20-21, 2022. The new target range is 3.00% to 3.25%.
The reaction of the U.S. stock market to the results of the meeting is negative. By the morning of September 22, the S&P 500 and Nasdaq indices had dropped about 1.5%, the euro weakened against the dollar (-1.2%), and the yield of the 10-year US government bonds decreased to 3.5% per annum.
According to the derivatives segment (CME FedWatch service), there is a 59% chance that the key rate will be raised to 4.25-4.5% by the end of the year. The FOMC’s next numerical forecast for the interest rate and economic indicators will come in December.
On September 25, Italy will hold general elections to elect a new prime minister to succeed Mario Draghi
This event could have a significant impact on the Euro and the FTSE. In particular, the FTSE is projected to fall in the weeks following the election.
Also, it cannot be ruled out that a deterioration in relations between the new Italian government and Europe would have an impact on the single currency at a later stage.
Specifically, the risk of losing access to these vital financial resources for long-term economic development in order to implement short-term populist fiscal measures is too high for the next Italian government to take.
Japan intervenes to buy the yen for the first time since 1998
The USDJPY has taken a nosedive from 145.80 to a low of 142.48 currently as Japanese authorities step in to buy the yen against the dollar for the first time since June 1998. It’s a historic move in markets and a massive signal of their resolve.
With the Fed turning ever more hawkish and the BoJ still printing money, it looks like the Japanese government wanted to stop a quick run to 150. Japanese authorities could well be battling with the FX market for the next 6-9 months as the dollar stays strong.
Gold ($GOLD) prices jump from 6-month lows after Russia steps up Ukraine war
We can see how gold jumped almost 1% after Putin’s statements about the start of partial army mobilisation in Russia. In general, further military confrontation in the Ukraine may encourage investors and traders to continue to seek refuge in gold. This may encourage the value of gold to rise further.
Trade $XAUUSD
Netflix’s ad-supported tier could launch the company ‘back into growth mode’
Oppenheimer Analyst Jason Helfstein upgraded Netflix’s shares, citing increased opportunity in the ad space.
“Netflix is in a unique position to aggregate large audiences and control the timing of series launches for top-tier advertisers”, Oppenheimer Analyst wrote in a new note to clients.
Netflix’s stocks, although up about 44% from their May lows.
What’s up next week?
Have a great weekend and see you next week!
