China's GDP strengthened the faith of a positive economic outcome

By: Miguel A. Rodriguez

11:49, 07 March 2023

DMO_07.03.2023.jpg

China keeps showing signs of positive economic outcome; the FED is in the spotlight as its latest interest rates start to produce their market impact. Recent interest rates advantageous for Gold 

After a good closing on Friday, US stock indexes continued to improve as market interest rates (treasury bond yields) stabilized and declined. Due to a significant reversal in the recalibration of bets on interest rate hikes by the Federal Reserve, last week's sharp increases in these interest rates sent shockwaves among risky assets around the world. 

Related Article: US Markets 

This near-term index strength is supported by the belief that the Fed's top rate may not be significantly higher than what the markets have already priced in. However, this cannot be confirmed before Friday's employment data and Fed Chairman Powell's double appearance before Congress. Expectations for the upcoming policy meeting at the end of this month are anticipated to be obtained from uncovered hints. 

China's GDP predictions that were revealed yesterday also contributed to the market's improved risk appetite. Although they were somewhat less ambitious than previously anticipated, 5% growth is still a respectable number, particularly if, as the Chinese government has conveyed, they do so without increasing the public debt and while keeping inflation at 3%. 

Monday's decline in market interest rates contributed to a narrowing of the interest rate gap between the dollar and the euro in favor of the single European currency. 

Related Article: Macroeconomic indicators 

Despite a significant decrease in eurozone retail sales, the EUR/USD pair climbed to levels near 1.07 yesterday. According to Lane, Governor of the Bank of Ireland and member of the governing council of the European Central Bank, the ECB will continue to raise interest rates beyond the 50 basis points projected for its March meeting. 

After the correction in February, gold restarts its bullish trend due to the dollar's weakening and the decline in market interest rates. From a technical standpoint, it is progressing toward the objectives of 1864 and 1882.

Sources: Bloomberg, Reuters 

 

 

 

 

 

Share this article

This information prepared by capex.com/za is not an offer or a solicitation for the purpose of purchase or sale of any financial products referred to herein or to enter into any legal relations, nor an advice or a recommendation with respect to such financial products.This information is prepared for general circulation. It does not regard to the specific investment objectives, financial situation, or the particular needs of any recipient.You should independently evaluate each financial product and consider the suitability of such a financial product, by taking into account your specific investment objectives, financial situation, or particular needs, and by consulting an independent financial adviser as needed, before dealing in any financial products mentioned in this document.This information may not be published, circulated, reproduced, or distributed in whole or in part to any other person without the Company’s prior written consent.
Past performance is not always indicative of likely or future performance. Any views or opinions presented are solely those of the author and do not necessarily represent those of capex.com/zaJME Financial Services (Pty) Ltd trading as CAPEX.COM/ZA acts as intermediary between the investor and Magnasale Trading Ltd, the counterparty to the contract for difference purchased by the Investor via CAPEX.COM/ZA, authorised & regulated by the Cyprus Securities and Exchange Commission with license number 264/15.  Magnasale Trading Ltd is the principal to the CFD purchased by investors.