ForexMart's Forex News

**KostiaForexMart** · 06-21-2022, 05:57 PM

June 21. The Bank of England urged not to use monetary policy to stabilize the pound

Hugh Pill, chief economist at the British central Bank, said that the Bank of England should focus its monetary policy on the main goal of controlling inflation, rather than trying to stabilize the exchange rate or economic activity.

Pill also noted that the regulator should pay attention to what is happening in the foreign exchange market and in other central banks, but at the same time realistically assess their capabilities.

«Monetary policy is an inaccurate tool, not a panacea,» the economist stressed.

A day earlier, a member of the Monetary Policy Committee, Catherine Mann, suggested that a more significant increase in interest rates in the short term could compensate for the weakening of the pound caused by inflation.

In December, the Bank of England became the first of the key central banks to raise the cost of borrowing after the pandemic and has since raised the key rate five times, bringing it to 1.25%. Pill suggested that further policy tightening may be required in the coming months, as inflation is approaching 11%.

**KostiaForexMart** · 06-24-2022, 09:04 AM

June 22. Inflation in the UK has updated the maximum in more than 40 years

According to the Office for National Statistics of the UK, in May consumer prices jumped by 9.1% compared to the same month last year. As a result, inflation in the country accelerated to the highest in more than 40 years. The current indicator coincided with analysts' forecasts.

In April, the annual inflation rate was recorded at 9%.

On a monthly basis, consumer prices in May rose by 0.7% compared to last month after a jump of 2.5% in April. Experts expected an average increase of 0.6%.

Analysts note that the increase in inflationary pressure in the UK is mainly due to higher prices for food and energy, including electricity, gas and gasoline.

Prices excluding food, alcohol, tobacco and energy (core inflation, CPI Core) in May increased by 5.9% in annual terms and by 0.5% monthly. In April, their growth was 6.2% and 0.7%, respectively.

Retail prices (RPI index) soared by 11.7% year-on-year after rising by 11.1% a month earlier. It is worth noting that it is the RPI index that is used by British employers when negotiating salaries.

June 23. The Asian market fell after Powell acknowledged the risk of a recession

The stock market of the Asia-Pacific region on Thursday morning is mainly reduced. Investors continue to assess the prospects for monetary policy after the head of the US Federal Reserve Jerome Powell acknowledged the risk of a recession.

In particular, the Japanese Nikkei 225 fell to 26.039 points, the South Korean KOSPI fell to 2.314. The Australian ASX 200 fell to 6.425. Hong Kong Hang Seng – to 21.008.

The Chinese Shanghai Composite is growing – up to 3.320.15 points. Shenzhen Component – up to 12.514.73.

Investors’ fears intensified after Jerome Powell said that a recession in the US economy is a very likely outcome. A sharp increase in interest rates can lead to an economic downturn.

At the same time, Powell acknowledged that the rate will continue to rise, but the Open Market Committee (FOMC) is monitoring the incoming data, which implies strict control over the situation, and monetary policy tightening will not be carried out solely on autopilot.

**KostiaForexMart** · 07-04-2022, 07:24 PM

July 4. Germany records first monthly trade deficit since 1991

The German authorities announced that in May, for the first time in 30 years, a trade deficit of almost €1 billion was formed.

According to the German Federal Statistical Office, in May, against the background of sanctions, the country's exports amounted to €125.8 billion, while imports reached €126.7 billion. For many years, Germany exported more goods than it imported into its territory. Analysts note that this is the first such case in the history of Germany since 1991.

The change in the economic situation in the country began after the start of the military special operation of the Russian Federation on the territory of Ukraine and against the background of Western sanctions imposed in this regard.

After the introduction of restrictions, the trade turnover between Germany and Russia sharply decreased: in March exports decreased by 62%, in April – by another 9.9%. The recovery of indicators was noted only in May – exports increased by 29.4%. At the same time, imports from Russia to Germany continue to decline: in April it fell by 16.4%, in May – by another 9.8% (up to € 3.3 billion). One of the most significant areas in which there has been a reduction is the energy market.

Recall that as part of the package of anti-Russian sanctions, Germany decided to abandon the purchase of oil from the Russian Federation, and now the country is urgently looking for ways to replace Russian gas. However, it is still impossible to completely abandon Russian raw materials: without gas supplies from Russia to Germany, there will be enough for only 1.5 months.

**KostiaForexMart** · 07-07-2022, 11:38 AM

July 6. The strike in Norway ended after the authorities intervention

The strike of representatives of the oil and gas industry in Norway ended after the intervention of the country's government in the situation. Experts note that if the strike is delayed, gas exports from the country could be reduced by more than half.

The strike was mainly attended by the management staff of offshore platforms – workers demanded higher salaries than the planned level.

As you know, Norway ranks second after Russia in terms of natural gas supplies to the European Union, providing about 25% of its needs. The strike, which began on Tuesday night, has already led to a reduction in daily gas exports from the country by 1%. Analysts estimate that by Saturday the drop would have reached 56%.

Following this, the cost of gas in Europe also jumped, to the highs of March. Prices in the region have risen to record levels, as many power plants run on natural gas.

Yesterday, Norwegian Labor Minister Martin Mies Persen held a meeting with oil companies and employee representatives, after which the union decided to end the strike.

«When a conflict can have such serious social consequences for the whole of Europe, I have no choice but to intervene in the conflict,» Persen said.

The minister also noted that the EU and the UK are completely dependent on the energy partnership with Norway, so it is extremely important to prevent a reduction in gas production.

July 5. Gas prices in Europe may rise to $2000

Experts suggest that the cost of natural gas in Europe may rise to $2,000 per thousand cubic meters if the strikes of Norwegian employees of oil and gas companies drag on. Norwegian workers have started a strike tonight demanding higher wages.

«If in the very near future the Norwegian Organization of Managers and Managers (Lederne) does not agree with the trade unions to raise workers' salaries, the cost of gas will easily rise to $ 2,000 and above,» the economists note.

Yesterday, gas prices in Europe rose to $1800 per thousand cubic meters in anticipation of strikes, for the first time since the beginning of March. Already today, the cost of «blue fuel» continues to grow: the current price is $1873 per thousand cubic meters of gas.

Experts also note that the situation is worsened by the comments of European politicians that after the planned repair of the Nord Stream, supplies may not resume.

After the strike was announced, the Norwegian oil and gas group Equinor announced that it was suspending production at three fields with a total hydrocarbon production of about 89 thousand barrels of oil equivalent per day, of which 27.5 thousand are natural gas. Tomorrow, the company plans to close three more fields, where 264 thousand barrels of oil equivalent of natural gas are produced per day.

**KostiaForexMart** · 07-07-2022, 10:08 PM

July 7. What will affect the markets today: July 7, 2022

Last night, the minutes of the US Federal Reserve meeting for June were published. According to the document, another increase in the interest rate by 0.75 percentage points is expected.

The protocol also showed that officials are in favor of a transition to a «restrictive policy» in case of continued increased inflationary pressure. The Fed has already acknowledged the likelihood of a recession in the US economy, but the regulator wants to achieve a «soft landing», which means lower inflation without job cuts. After the publication of the protocol, the shares of technology companies rose, stabilizing the market as a whole.

What other events will be able to influence the dynamics of the market today, July 7?

Applications for unemployment benefits

First, it is worth paying attention to the data on the number of applications for unemployment benefits in the United States. The monthly Non-Farm Payrolls report will be published tomorrow (it is expected that 268 thousand jobs will be created in the economy, which is lower than the May figure of 390 thousand). But first, the States will provide statistics on weekly applications for unemployment benefits. According to the forecast, this number will remain at the level of 230 thousand compared to a week earlier. The number of open vacancies will amount to 11.25 million vacancies, which exceeds the expected 11 million.

Crude oil reserves

The main event of this week was the fall in crude oil prices below the level of $ 100 per barrel. A report from the US Department of Energy on crude oil reserves in the country will be published today. Analysts expect a decline to the level of 1.04 million barrels.

Levi Strauss Earnings

Levi Strauss & Co, a well-known clothing and footwear manufacturer in the United States, is expected to report earnings of 23 cents per share on revenue of $1.4 billion. In addition, bank reporting will begin next week, and Wall Street's attention will be drawn to the business conditions for large lenders (as it assesses the long-term damage from sustained price increases).

**KostiaForexMart** · 07-10-2022, 01:50 PM

July 8. Germany faces new energy risks

The energy crisis in Europe continues to develop, reaching unprecedented proportions. First, Russia's military operation in Ukraine dealt a blow to the country's energy and economy, which led to severe disruptions in the supply of raw materials and hydrocarbons to Europe.

An additional risk for the German energy sector is the current shallowing of the Rhine River in Germany. As it’s known, the river supplies coal for thermal power plants and other needs.

The fact that now the water level in the main transport artery is extremely low suggests that barges will not be able to load thermal coal in full. And this will be a strong blow to the utilities of Germany, as they are already facing a shortage of ships.

Experts note that periodically the Rhine shallows, which restricts navigation along the river and forces to reduce the amount of cargo transported. For example, a barge with a capacity of 2500 tons has the ability to take on board only 1600 tons.

The country's energy companies are gradually starting to prepare for winter, but the prolonged drought observed in Germany in recent weeks may lead to delays in the supply of resources.

**odfamgaingnam30o** · 07-10-2022, 11:35 PM

**KostiaForexMart** · 07-11-2022, 08:40 PM

July 11. Brent fell to $103.70 per barrel

Oil prices were actively declining during Monday's trading, reaching a local low at $103.70 per barrel. The pressure on the asset was exerted by news about the increase in the incidence of coronavirus in China. During the day, Brent managed to recover to $106.80 per barrel.

According to official data, 352 new cases of Covid-19 were detected in China on Sunday. As a result, the authorities of several large cities have re-introduced strict restrictive measures in order to prevent the further spread of infection. And this, according to analysts, may lead to a reduction in fuel demand in the world's largest oil importer.

In addition, the focus of the markets this week is the visit of US President Joe Biden to Saudi Arabia. Biden intends to meet with the Crown Prince of the country, as well as with the leaders of other Arab countries, including Egypt, Jordan, Iraq and the United Arab Emirates.

The meeting will address the issue of increasing oil production in the region. However, even if the participants decide to increase production, this will have an extremely insignificant impact on the dynamics of the market, since the reserve capacities of the OPEC states are limited.

**KostiaForexMart** · 07-12-2022, 07:55 PM

July 12. The Fed's monetary policy may drop Bitcoin to $15 thousand

Experts suggest that if the Fed continues to keep interest rates at high levels for a long time, most risky assets will be under strong pressure. As a result, the rate of the most popular cryptocurrency, bitcoin, may fall to $15 thousand.

There is an opinion among analysts that the Fed will keep interest rates at high levels for a long time due to fears of a repeat of the situation of the 1970-s, when the fight against inflation was curtailed too early and further price growth got out of control. That is why now the regulator must make sure of the victory over inflation, and only then proceed to change the strategy.

It is also worth noting that the US dollar, being a safe haven currency, still feels confident, despite the fact that the need for its purchases should have disappeared. The reason for this was serious problems in other economies, in particular the eurozone: an increasing number of analysts and market players are confident that a recession is coming – and it is expected that GDP will decline even if Russian gas supplies remain.

If we consider only the cryptocurrency market, then from time to time you can observe rebounds from local lows, but there is no talk of a full-fledged recovery rally yet. The current bitcoin quote is $20,186.

**KostiaForexMart** · 07-13-2022, 06:24 PM

July 13. The Central Bank of South Korea raised the rate by 50 bp at once

For the first time in history, the Bank of Korea decided to raise the key rate by 50 basis points at once to combat high inflation. Now the rate is now 2.25% per annum. After the announcement of the regulator's decision, the exchange rate of the South Korean won rose against the US dollar by 0.6%. However, the currency still remains near the lowest in 13 years.

The rate has been increased for the sixth time since August 2021 and the pace of its rise has become the highest since the adoption of the key rates policy by the regulator in 1999. Analysts are confident that the central bank will continue to tighten policy in the coming months.

The chairman of the central bank of the country, Chanyon Ri, said that the non-standard decision on the rate was made unanimously, however, if the inflation curve follows the projected trajectory, further rate increases will be the usual 25 bps.

Inflation in South Korea in June was 6% in annual terms, which was the highest since November 1998. This year, inflation is expected to exceed the previous forecast of 4.5%. At the same time, the regulator presented a worsened forecast for GDP in 2022: it is expected that the rise will be weaker than 2.7%, which were predicted earlier.