The stock and crypto markets became more heated as investors took on risks of hindering the USD’s momentum. Besides, the price of gold dropped again.
Fed Chairman, Jerome Powell, on March 21 pledged to take tough action to combat inflation, and said that there is a risk of high inflation threatening the strong recovery of the economy after the pandemic. Covid-19.
“The labor market is very strong, and inflation is too high,” Mr. Powell said at a National Association of Business Economics (NABE) event. He reiterated the position the Fed made in its closing statement last week that interest rates will continue to be raised until inflation is brought under control.
Last week, the Fed raised the basic interest rate by 25 percentage points, the first increase in more than three years, to combat the 40-year high inflation in the US.
Following Mr. Powell’s comments, Goldman Sachs is confident that the Fed will raise interest rates by 50 basis points at both its May and June meetings.
According to CME’s FedWatch Tool, traders are identifying a 66.1% chance that the US Federal Reserve (Fed) will raise interest rates by 50 points at its May meeting. This rate is significantly higher than the 50% predicted last week.
The Dollar index – which compares the USD with a basket of major partner currencies – at the end of March 22 in Vietnam time increased slightly by 0.02% to 98,515. Before that, there was a time when this index dropped because the USD was overshadowed by the prosperity of the stock market.
Investors are in a risk-on mood, pushing US stocks higher and reducing the appeal of safe-havens like the USD and gold. A strong rise in bank stocks – as the Fed is expected to raise interest rates sharply – helped push the stock market higher.
“It seems that the market is doubting the Fed can have a ‘soft landing’ and that’s driving up demand for risk assets that’s been holding back a strong dollar, at least,” said Joe Manimbo. at this moment”. “The dollar is backed by the Fed’s interest rate stance becoming more hawkish, but the dollar is already at its peak, and that’s why investors are looking to riskier assets,” Manimbo said. .
The yen continued its weakening trend as the Bank of Japan continued to maintain its stance on leaving the ultra-easy monetary policy unchanged.
The Japanese yen on March 22 touched a 6-year low against the USD, surpassing the 120 JPY threshold, down to 121.03 JPY/USD, losing about 1% in this session.
Yen also fell against other currencies, whereby the euro touched a 5-month high against the yen, sometimes reaching 133.33 JPY, ending March 22 still increased 1.18% to 133.14 JPY. The Japanese currency also fell to its lowest level in more than 6.5 years against the Swiss franc, at 128.91 JPY, ending the session still down 1.48% at 128.89 JPY.
The euro at the end of March 22 in Vietnam time increased 0.14% to $ 1.1029. However, the currency remains at lows after days of weakness as the conflict in Ukraine raised energy prices.
The President of the European Central Bank (ECB), Christine Lagarde, said on March 21 that the Fed and the ECB will move out of sync, as the war in Ukraine has very different effects on their economies. .
ECB policymaker Francois Villeroy de Galhau said on March 22 that the European Central Bank needed to look beyond short-term fluctuations in energy prices, and focus on underlying inflationary trends. .
The British pound at the end of March 22 in Vietnam time increased 0.64% to $ 1.3249.
Asian currencies and stocks both fell on March 22 after the Fed Chairman said the US central bank is ready to act aggressively to combat inflation, as investors consider the impact. potential from the crisis in Ukraine.
The Indian rupee, Thai baht and South Korean won all fell 0.5 percentage points in the past session, with the rupee hitting a one-week low and the baht falling to its lowest level in more than two months.
China’s yuan this session also went down. In China’s spot market, the yuan ended the day down 71 pips to 6.3639 CNY/USD.
In the crypto market, Bitcoin surged spectacularly to the highest level in nearly 3 weeks, at one point increasing 5.6% to $43,337 (the highest since March 3), dragging other digital currencies with it. smaller as ehter increases.
At the close of March 22 local time, Bitcoin was still up 3.6% from the previous session, while ether was up 5.4% to its highest level since February 17.
Analysts said there was no specific news to help boost the price momentum in the past session, and expected that move to stem from investors’ preference for riskier assets.
The cryptocurrency market has gained more than 26% in value since hitting a low of $34,324 on February 24 – when the Russia-Ukraine conflict erupted. This market rally reflects the uptrend in stock prices.
Bitcoin movements on March 22.
Gold prices fell to the lowest level in nearly a week after the Fed Chairman expressed a ‘hawk’ view on interest rates.
Spot gold price at the end of March 22 in Vietnam time decreased 1% to 1,916.93 USD/ounce; Gold futures for April also fell 0.7 percent to $1,915.10.
However, analysts say that while gold’s upside momentum has eased significantly, the focus of investors’ attention remains on the conflict in Ukraine, and any major developments related to it. that can also cause sharp price swings.
References: Refinitiv, Coindesk