The Dollar is Shining and the Tightening Policy Continues

MARKET NEWS SUMMARY

The minutes of the Fed’s meeting issued yesterday, February 22, indicated that almost all of the participants agreed that it was appropriate to raise interest rates by 25 basis points, but at the same time indicated that there were a few participants who supported a rate increase of 0.5% as they believe that a larger increase will be faster to reduce inflation and reach the target set.

The Fed had raised interest rates by 25 basis points the previous meeting, towards a level between 4.5% and 4.75%. The Fed indicated that despite the somewhat slowdown in inflation, it is still rising and much higher than the target, and it also indicated that the labor market is still very tight, which contributes to the continuation of upward pressure on wages and prices.

Some Fed officials expressed high levels of uncertainty about the outlook for the economy, the labor market and inflation, although they see the risks to the economy’s outlook going down.

European stocks declined at the end of yesterday’s trading session, Wednesday, February 22, the STOXX600 index fell by 0.33% to 462 points, while the French CAC fell by 0.13%, recording 7299 points, and the British FTSE ended the session down by 0.59%, recording 7930 points, while the DAX was stable. German stocks, recording 15,399 points, shares of mining companies fell by more than 2%, and banks by about 1.6%.

Dollar index (USDX)

The dollar index rose above 104 levels yesterday, after a resounding decline in the US markets, after increasing fears that the US interest rate peak would reach 5.50% or higher.

It was clear from the minutes of the FOMC meeting that it was agreed on the need to continue tightening monetary policy and raising interest rates to combat inflation.

Pivot Point: 104.30

British Pound (GBPUSD)

The price of the sterling against the US dollar moved positively for two days in a row, with gains that affected the resistance level of 1.2147, and settled around the level of 1.2060, which are important resistance areas for it.

Momentum indicators show negativity and trend indicators as well. This is after the minutes of the Fed’s meeting indicated that the Fed would continue to raise interest rates. Moreover, the dollar index rose, putting pressure on the pound against the US dollar.

Pivot Point: 1.2070

Spot Gold (XAUUSD)

Gold futures contracts declined slightly at the settlement of yesterday’s session, Wednesday. Upon settlement, gold futures contracts fell by 0.1% to $1841.50 an ounce, which is the lowest settlement price since the beginning of January.

The minutes of the last meeting of the Fed showed that all participants agreed on the need for more rate hikes to achieve the mission of the Open Market Committee and inflation targets. However, the minutes stressed that although inflation has slowed somewhat, it is still rising and much higher than the target.

Attention is now on the US GDP, inflation, and jobless claims data, which are scheduled to be released successively over the next two days.

Pivot Point: 1,831

US Crude OIL (USOUSD)

Oil prices recorded their lowest settlement price in two weeks on Wednesday, February 22, amid concerns about the future growth of the global economy, demand for crude, and the Federal Reserve interest rate.

Upon settlement, Brent crude futures fell by about 3% to $80.60 a barrel.

US West Texas Intermediate crude futures fell by 3%, to settle at $74.05 a barrel.

Pivot Point: 74.70