The Russia-Ukraine war continues to be the main topic in the markets. As neither side wants to soften its redlines, there is no end to the aggression in sight. Conflict triggered massive spikes in commodity prices that will fuel inflation and create headaches for central bankers. Investors will get to hear from the Fed and Bank of England next week on how they plan to manage the current situation. Be sure to watch GOLD, GBPUSD and OIL next week!
GOLD
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Create account Try a demo Download mobile app Download mobile appMessages sent by the European Central Bank last Thursday was a hawkish one but the Bank did not provide any clear guidance on when rate hikes will begin. Situation looks different in case of the Federal Reserve, with the FOMC expected to deliver a 25 basis point rate hike this week (Wednesday, 7:00 pm GMT). It looks like a done deal and investors will focus on hints on pace of tightening in coming months. Signals that it may be quicker than earlier expected with end-rate being higher may put more pressure on gold prices that have dropped back below $2,000 per ounce last week.
GBPUSD
The Federal Reserve will not be the only central bank to announce a rate decision next week. Investors will also get to hear from the Bank of England on Thursday, 12:00 pm GMT, with the UK central bank expected to deliver a 25 basis point rate hike. However, money markets price in more than 100 basis points of rate hikes during the next 3 BoE meetings therefore a 50 basis point rate cannot be ruled out. GBP weakened after the beginning of Russian invasion of Ukraine and GBPUSD dropped to a 16-month low last week.
OIL
The United States and some of its allies announced that they will ban imports of Russian energy commodities. However, such a decision was not made by all of the Western countries, which may have prevented Russia from cutting Europe off its oil and natural gas supplies. Nevertheless, such a scenario cannot be ruled out completely and it would create a massive upward pressure on the oil prices. On the other hand, the market does not seem to believe it to be possible with oil prices pulling back from its recent highs by the end of the week.
