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29th August 2022: Friday trading signals are given -2.446%; Interest rates will rise; Review of the British Economy; The fall of the yuan has been halted

29th August 2022: Friday trading signals are given -2.446%; Interest rates will rise; Review of the British Economy; The fall of the yuan has been halted

29.08.2022

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Friday trading signals are given -2.446%

Symbol: EURUSD; Type: BUY; Open Price: 1.02099; Close Price: 1.00508; Profit: -1.558%.
Symbol: USDCHF; Type: SELL; Open Price: 0.95003; Close Price: 0.95854; Profit: -0.888%.

Interest rates will rise

On Monday, traders were digesting statements from Federal Reserve Chair Jerome Powell, which caused the stock market and Treasury bond prices to fall. Powell stated that the Federal Reserve is prepared to continue raising interest rates, despite the possibility of a slowdown in economic activity. The yield on the 10-year US Treasury note increased and is currently sitting at 3.08%. Before turning for the worst, the work on the two-year bond had reached a level that hadn’t been seen since 2007. September had the poorest average monthly price change for the S&P 500, making it one of just two months (together with February) to show a drop.

After many officials from the European Central Bank emphasized the necessity of tamping down inflation, bond prices throughout Europe fell, with the yield on Germany’s 10-year bond climbing to a high of 1.5%. Some see that Bitcoin maintained a price below $20,000 as evidence of a broader decline in investor sentiment.

Review of the British Economy

In relation to the dollar, the pound is now trading around $1.18, less than 4 cents away from its worst level since 1985. As a result of the surge in electricity costs, increased inflation estimates are making their way through the financial markets, causing traders to assume that interest rates will increase in the coming year. Already, the BOE has projected that a five-quarter recession will begin in the latter part of this year. There is a strong possibility that yields on benchmark short-term bonds issued in the UK may hit a new high this month. The yield on the two-year note has increased by 111 basis points, bringing the cost of borrowing money to 2.82%. This is the highest level since the beginning of the global financial crisis in 2008. The decline in the pound’s value has benefited many of the United Kingdom’s largest exporting companies, and as a result, the FTSE 100 Index is now up 0.3% for August.

The fall of the yuan has been halted

The recent devaluation of the yuan has been met with resistance from some Chinese banks, which has, in effect, helped to restrict future decreases in the currency’s value concerning the dollar. This week, the People’s Bank of China signaled its willingness to moderate the speed of the currency’s depreciation by setting the daily reference rate for the yuan at firmer levels than expected. According to the sources, at least two banks that set quotes have modified their models to hedge against the yuan’s weakening. Until last week, the People’s Bank of China (PBOC) has mostly refrained from taking action to combat the yuan’s decline. It set Thursday’s fixing 120 pips higher than the average expectation of experts and traders, making this the most significant difference since February 2020. It is permissible for the yuan to deviate by 2% on each side of the fixing rate, which tends to be higher when the banks giving the quotes tilt towards depreciation.

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