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Global Central Banks Focus on Tackling Inflation


US stocks declined on Monday, extending their recent slide and fell in a volatile session amid the fact that worldwide central bankers insisted on battling inflation at any cost. On the economic data side, US Durable Goods Orders and CB Consumer Confidence are taking centre stage on Tuesday.

The UK markets were in focus on Monday as the UK’s plan to lift its economy fueled fears that heightened inflation would push rates higher and ignite a global recession. Despite the Bank of England Governor Andrew Bailey’s repeated they would not hesitate to alter interest rates if necessary and added that they are closely monitoring financial markets developments, the comments did little to reassure traders who were waiting for a broader policy response.

In the Eurozone, investors are awaiting the European Central Bank (ECB) President Christine Lagarde’s speech, which will provide cues for likely monetary policy action ahead.

The benchmarks, S&P 500 and Dow Jones Industrial Average both declined on Monday as the S&P 500 ended yesterday’s session at its lowest level since December 2020 meanwhile the Cboe Volatility Index spiked past 30. The S&P 500 was down 1.00% daily and the Dow Jones Industrial Average also dropped lower with a 1.1% loss for the day. Ten out of eleven sectors in the S&P 500 stayed in negative territory as the Real Estate sector and the Energy sector are the worst performings among all groups, losing 2.63% and 2.57%, respectively. The Nasdaq 100 meanwhile dropped the least with a 0.5% loss on Friday and the MSCI World index was down 2.0% for the day.

Main Pairs Movement

The US dollar climbed higher on Monday, preserving its upside strength and touched the highest since 2002 above the 114.5 mark amid recession fears and rising interest rates. The Federal Reserve’s 75 basis point hike in interest rates and the promise of further increases as the central bank looks to quell inflation has underpinned the safe-haven greenback and pushed major pairs into fresh multi-year lows.

GBP/USD tumbled sharply on Monday with a 1.04% loss after the cable recovered slightly from the all-time low marked on Monday amid the pessimism surrounding the UK. On the UK front, British finance minister Kwasi Kwarteng announced the scrapping of the top rate of income tax and cancelled a planned rise in corporate taxes. Meanwhile, EUR/USD preserved its downside momentum and traded near a fresh two-decade low of 0.9549 amid US dollar strength. The pair was down almost 0.60% for the day.

Gold declined with a 1.29% loss for the day after dropping to the lowest in more than two years below the $1,623 mark during the US trading session, as the risk aversion keeps traders’ flows toward the greenback and weighed on the safe-haven metal. Meanwhile, WTI Oil retreated further with a 3.74% loss for the day after retreating from the $80.0 area amid concerns about a global economic slowdown.

Economic Data

CurrencyDataTime (GMT + 8)Forecast
BRLBCB Copom Meeting Minutes19:00
USDFed Chair Powell Speaks19:30
EURECB President Lagarde Speaks19:30
USDCore Durable Goods Orders (Aug)20:30
USDCB Consumer Confidence (Sep)22:00104.5
USDNew Home Sales (Aug)22:00500K