By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA
Equity markets are cautiously higher in Europe while the US is poised to open relatively flat as we await appearances from the heads of the Fed, ECB, BoE and BoJ.
Fed Chair Jerome Powell, ECB President Christine Lagarde, BoE Governor Andrew Bailey, and BoJ Governor Kazuo Ueda are due to take part in a panel discussion at the ECB Forum on Central Banking around the opening bell in the US and their comments could set the tone for the rest of the day.
Often in these situations, policymakers will stick to the script, preferring to leave big announcements for meetings and certain high-profile events. But with so many heads appearing at the same time, there’s every chance at least one says something that will either rattle or stimulate the markets.
To make this event more intrguing, they’re all contending with very similar issues and yet their individual situations are quite different, which could make the discussion all the more interesting.
The Fed is arguably closest to the end of its tightening cycle and will probably be the first to cut rates, the ECB appears to be making some progress but is also more pessimistic than many on how much more is needed, the BoE is in a mess, frankly, and the BoJ may simply watch as the whole thing passes it by.
It really is quite fascinating and it will be interesting to hear what each has to say about the current environment. Especially with the Fed and ECB until now adopting a more hawkish stance than most, the BoE coming across less hawkish but recently being forced to pivot back to larger hikes, and the BoJ pushing back against any hawkish expectation in the markets.
Oil prices hold in recent range
Oil prices are edging higher again today after once again sliding back toward the range lows of the last few months. What’s interesting is that, as we’ve seen previously, Brent crude failed to reach the previous low. It’s now the fourth time that’s happened in recent months and suggests we are potentially in a prolonged period of consolidation, with little sign yet of further downside momentum building.
That may of course change as the environment changes, which can happen quite rapidly these days, but for now it looks stuck in that lower range between $70-$80, perhaps even $72-$77.
Can gold hold above $1,900
Gold is slipping again this week after initially breaking below its recent range just over a week ago. It’s now falling to a new three-month low and appears to be closing in on $1,900 which could represent the next big test of support for the yellow metal.
Appetite for gold has dwindled as investors have increasingly come around to the reality that not only could more rate hikes be in the pipeline, but rate cuts this year are now highly unlikely. Inflation is proving even more stubborn than expected on the way down and that’s bad news for gold.
Is bitcoin going to take off from here?
Bitcoin has steadied between $30,000 and $31,000 in recent days after surging on the back of encouraging ETF filings. The SEC lawsuits against Binance and Coinbase have not been forgotten but they’ve certainly drifted into the background and been overtaken by far more promising news flow.
It would appear the cryptocurrency has good momentum once more and the community may well be wondering if this could be the kind of development that sees enthusiasm for cryptos surge again. It’s obviously been a fantastic year for bitcoin so far but the sell-off since mid-April was another reminder that it doesn’t come without major setbacks.