Bank of China WEEK & Employment Statistics passed through
Last week saw the policy rate decision meetings of major central banks, and the employment data came in slightly stronger than expected.
Uran commodity gold rose following a substantial drop in real interest rates.
Since dipping below $1760 at the FOMC, it has risen by more than $50.
It is driven by rising expected inflation and U.S. interest rates remaining flat, causing real rates to fall.
Unless inflation pressures ease, the outlook remains for continued low-altitude movement, and with supply-chain issues not expected to be resolved in 2022, gold futures are likely to test higher levels.
“Central bank policy rates and Bailey Governor”
Central banks around the world have made important decisions, but overall they have been dovish.
From Governor Bailey’s remarks (stating on September 27 that the case for rate hikes had strengthened, and further hawkish remarks in mid-October), the pound’s pre-emptive rally that had priced in hikes has largely eased.
The BOE decision seemed to follow the ECB and the Fed just before it.
What he said at the press conference, that “the response to inflation is something that can be achieved mostly through monetary policy,” is accurate but does not solve the root problem.
However, if the market perceives that the central bank cannot take action on inflation that has heightened nerves, that could undermine the central bank’s credibility, so the raised fist may be slow to lower.
By analyzing the chart and statements with timing, we assess the pound/yen bottoming out.
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