SNB, BoE and ECB raised their interest rates by 50 bps

　　

This Friday, after hawkish signals from central banks, sparked a rout in US and European shares and a rally in the dollar. The S&P 500 closed at its lowest level in more than a month and the dollar climbed the most since September as investors sought haven assets after warnings by the Federal Reserve and the European Central Bank of more pain to come. The greenback rallied since early Asia, as China published discouraging macroeconomic figures. On Thursday, The Bank of England, the Switzerland National Bank and the European Central Bank announced their decisions. The three banks hiked rates by 50 bps, the risk-off mood comes as central banks this week eased back from the larger hikes seen for much of this year but revised up their expectations for how high rates may need to go, which cause US indexes to plummet, and the dollar soared.

The Dow Jones Industrial Average has dropped 2.25% to close at 33202.22. The S&P 500 dropped 2.49% to close at 3895.75. The tech-heavy Nasdaq Composite dropped 3.23% to close at 10810.53. China and Hong Kong no longer face an acute threat of being booted off American stock exchanges. Weakening sentiment though is the US government blacklisting Yangtze Memory Technologies Co. and dozens of other Chinese tech companies, leads the huge fall of U.S. equity. This year, the global economy could be pushed into a recession and weighed heavily on riskier assets such as equities. Further, the US Treasury bond yields raised. U.S. 10-year treasury yield sits at around 3.464%. The policy-sensitive 2-year treasury yield sits at 4.252%.

Main Pairs Movement

The US Dollar bounced back from its 4 months lowest point, the risk-aversion drowned the Wall Street benchmarks and favoured the US Treasury bond yields, which in turn allowed the US Dollar Index (DXY) to print the biggest daily gain in 10 weeks, moreover, renewed fears of higher rates and recession weigh on the price while preliminary readings of the December month PMIs for the UK, Europe and the US will be crucial to determine the risk-off currency further downside.

The Gold price had been pressured by the ascending trend of DXY, which dropped 1.69%, price closed at $ 1776.875, and still can’t break the resistance at $1810, besides, a broad gamut of 0.50% rate hikes by the US Federal Reserve, Bank of England, Swiss National and the European Central Bank raised fears of higher rates across the board and weighed on the market sentiment, as well as the Gold price.

EUR/USD has found an intermediate cushion around 1.0600, the downside remains favoured on risk-off mood, and ECB sees two more 50 bps interest rate hikes consecutively to combat ramp-up inflation. The commentary from ECB President that food and energy inflation will continue to rise from January has created havoc among investors in the Eurozone economy. The country will face tremendous pressure due to the higher headline Consumer Price Index (CPI) and further escalation in catalysts will dampen the market mood.

Economic Data

Currency	Data	Time (GMT + 8)	Forecast
GBP	Retail Sales (Nov)	15:00	0.3%
EUR	German Manufacturing PMI	16:30	46.3
GBP	Composite PMI	17:30	–
GBP	Manufacturing PMI	17:30	46.5
GBP	Services PMI	17:30	49.2
EUR	CPI (Nov)	18:00	10%
RUB	Interest Rate Decision (Dec)	18:30	7.5%