The dollar topples the rest of the currencies following rising 1.5%
Oil falls 4.8% as global recession fears escalate, and gold is at its lowest level from 2020
The US Federal Reserve raised interest rates last Wednesday by regarding 75 basis points, to bring the return on the federal funds to between 3% and 3.25%, for the fifth time in a row during 2022; Bringing the total that it raised since the beginning of the year regarding 300 basis points in the strongest pace of monetary tightening in the US economy since the eighties, in an attempt to control inflation, which jumped to 8.3% last August, outside the 2% targets.
US Federal Reserve Chairman Jerome Powell stressed that the Fed’s priority is to combat inflation; Therefore, it will continue the monetary tightening policy until it returns to the range of targets, amid expectations that US interest rates will continue to rise to reach 4.4% by the end of 2022, and 4.6% by the end of 2023, according to the average estimates in the updated quarterly forecasts announced by the Federal Reserve. Reduce it by 2024, according to Bloomberg forecasts.
The indices of the American stock exchange ended the last sessions of the week with strong declines, as the “Dow Jones Industrial Average” fell 473.55 points, or 1.57 percent, to 29603.13 points, and the “Standard & Poor’s 500” index fell by 1.72%; To close at 3693.23 points, while the “Nasdaq Composite” lost 1.75% to fall to 10873.10 points. On a weekly basis, the Standard & Poor’s 500 fell by 4.64%, the Dow Jones by 3.99% and the Nasdaq by 5.07%.
In European markets, the shares of the broader index approached its lowest level in two years, with the emergence of economic data that showed a slowdown in the activity of the euro area, accelerating its entry into economic stagnation, as the British Financial Times Index lost 2%, and the European Stoxx 600 index fell 2.3%, to reach Its weekly loss was 4.4%, its worst week since mid-June, and the main index in Germany, Europe’s largest economy, lost 2%, its lowest level since November 2020.
In the currency market, the dollar’s strength increased, supported by the expectations of raising interest rates on it; Global currency prices fell to their lowest levels in decades, bringing the performance of the dollar index once morest a basket of 6 global currencies by the end of the week by 1.5% to 112 points, an increase of 21% since the beginning of the year, while the ruble was the only currency that recorded an increase, supported by the decision of Russian President Vladimir Putin to announce About the general mobilization, which prompted Russian citizens to buy their currency participating in the military campaign and give up foreign currencies, which raised the ruble.
While the euro and the pound sterling once morest the dollar fell to their lowest levels in 20 and 37 years, respectively, as the euro fell 1.5% to $ 0.9689, and the sterling pound fell 3.4 percent to $ 1.0874, touching its lowest level in 37 years at $ 1.0840.
Gold prices globally have suffered strong losses, reaching their lowest levels since 2020, with the escalation of the dollar’s strength that reduces its prices, as it is not an attractive investment vessel for investors at the time of the interest increase because it does not generate a return, as gold fell in immediate transactions 1.6 percent to 1644.04 dollars an ounce, And US gold futures lost 1.5 percent to settle at $ 1655.60 an ounce, and with this, gold is heading to record the second weekly decline in a row, by 1.8 percent, amid expectations from Fitch that gold will fall starting next year, as the sudden jump in prices will not last long. , to reach the levels of $1600 in 2023, coinciding with the reduction of these tensions and the continued growth of the dollar’s strength.
As for the energy markets, oil prices fell at the settlement of 5%, recording the lowest level in eight, affected by the rise in the strength of the dollar, which reduces demand for it. US West Texas Intermediate $4.75, or 5.7 percent, to settle at $78.74, down regarding seven percent for the week.
The global investment bank, “Goldman Sachs”, lowered its outlook for the US stock market with expectations of a continued interest rate hike, as it expected that it would target the “S&P 500” index to 3600 from 4300 at the end of 2022, saying that “the risks included in its latest forecast tend to exacerbate due to a rise in interest rates.” Recession prospects, which drives a scenario that reduces corporate profits and widens the yield gap, and pushes the US stock index to a low of 3150.”
