Good morning,
The countdown to spring begins today on Groundhog Day. An urban tradition that states if the Groundhog sees its shadow it will determine if there will be an early spring or a harsh end to winter. Nevertheless, he will hibernate at least for the next six weeks.
Speaking of eventful, this week is full of anticipation keeping the masses on their toes, and forgetting about sleep, as the decisions made by Central Bankers will have a direct impact on economies and people’s lives.
The Federal Reserve started the party as it raised interest rates by 0.25% as expected. Their resolve is steadfast in keeping rates elevated despite the economic consequences. This could be a last stand for maintaining USD strength as rates might cease their upward momentum. Yet they will remain elevated for the foreseeable future.
The USD strength could be challenged as the interest rate spread between Europe and America tightens. Europe continues its’ aggressive pace as both the ECB and BOE increased rates by 0.50% this morning claiming inflation needs to come under control despite poor economic growth. The big tell was the contraction in Europe’s biggest economy, Germany. Its GDP contracted by <0.2%>, expected flat or (0%), and much lower than the previous quarter’s (+0.4%) reading. People can feel the effects of a recession without needing to wait months for the results.
In my opinion, they need to maintain this stance to make it seem as if their policies are working to the detriment of working-class people. In fact, the Central Bankers along with governments, keen on spending money they don’t have, are solely responsible for runaway inflation.
Nonetheless, volatility will be extreme. The USD Index plummeted below the 101.0 level and presently stands at the 101.70 level. Meanwhile, Precious Metals saw Gold break above $1950/oz and Silver hit above the $24.60/oz level. As the USD rebounded the Precious Metals retracted from their recent highs. On the other hand, Oil slips toward the $75.50/barrel level. As a result, the Canadian tested the 0.75 cent level but quickly reverse course on the downtrend in Oil prices. Keep in mind, it is the largest variable in the inflation fight and can easily be manipulated to justify their means and support the Central Bankers’ policy agenda. It’s nothing more than collusion.
On Friday, the markets will digest the Non-Farm payrolls or unemployment rate in America. A prelude to this number was the Jobless Claims presented. There were 183k vs expected (200k). If the number is strong, expect the USD to rebound, if not, this could be the start of its demise. Meanwhile, cast your own shadow by feeling the warmth of the sun and don’t let all this noise affect your days and weeks ahead.
I think I love you!