Daily Alert – Friday 28th July 2023: All is well in the US, not so much in the eurozone

Mark NugentDaily Alert, July 2023

Daily Alert – Friday 28th July 2023: All is well in the US, not so much in the eurozone

Good afternoon.

On Wednesday, the Fed hiked by 25 basis-points to 5.5%, as expected. Powell was bullish on the US economy and said the bank is no longer forecasting a recession.

It was a bit different over at the European Central Bank (ECB). Although a further 25 basis-point hike was delivered, as expected, President Lagarde was decidedly more dovish than she has been. There is widespread concern about the fragile state of the eurozone economy. She said that the bank remains open about the next meeting in September. A hike or a pause is possible. I think most observers see a pause as more likely.

The Bank of Japan surprised the markets by making a change to their yield-curve-control (YCC) policy which boosted the yield of their 10- and 2-year bonds. The JPY also moved up significantly. I am going to make another attempt to understand what this policy is all about. Believe me, I have tried.

Global equity indices moved up over the week, just. The GBP rose, as per my bias. The EUR sank after Thursday’s ECB. I may have to change my long bias for the EUR. The USD does not know what it is doing.

I placed one trade, GBPCAD. It was not the greatest trade, but it netted 1.45%. I explain more about it in the video.

Have a great weekend when it comes, and I’ll be back on Monday.

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