By Craig Erlam
A busy week comes to an end with a triple witching event that no doubt added to the lively conditions. And next week is only going to go up a notch again, with multiple central bank meetings that will lay the groundwork for the rest of the year.
The ECB got the ball rolling on Thursday with a dovish 25bp rate hike, likely the final one of the cycle. It was released alongside a statement that effectively gave it that additional dovish touch that many may not have seen coming.
The question now is, will other central banks take a similar approach next week?
We may see final rate hikes from the BoE and the SNB, while the Fed is probably already done, but hasn’t explicitly indicated so yet, and the BoJ may just be about to start, although probably not. Needless to say, it could be a wild one for the markets.
Oil rally remains after OPEC confirms deficit
Oil prices are continuing to rally, up around 15% over the last few weeks and still looking healthy.
OPEC+ cuts, alongside voluntary additional supply restrictions from Saudi Arabia and Russia, have created a very tight market.
The OPEC September report highlighted this with a 3 million barrel per day deficit driving prices up to their highest level in ten months. And the rally is showing few signs of cooling.
Unless the economic data deteriorates, we may be talking about $100 crude before long.
Gold recovering ahead of Fed
Gold is bouncing back at the end of the week, albeit from quite low levels, having fallen as low as $1,900 on Thursday.
The Fed meeting on Wednesday is naturally the big event next week for the yellow metal, with the Fed not only announcing its latest decision on interest rates, but also releasing new economic forecasts.
Will policymakers be as explicit as their counterparts at the ECB in signaling the end of the tightening cycle or keep their cards closer to their chest? I’m tempted to say the latter, as the economy has been quite resilient.
Bitcoin recovery is uninspiring
Bitcoin has found its feet a little after briefly dipping below $25,000 at the start of the week.
While the rebound may have brought some relief, it may not inspire confidence. The trend is not in its favour and it may need some good newsflow to get things going again.
Craig Erlam is Senior Market Analyst, UK & EMEA at OANDA
Opinions are the author’s, not necessarily that of OANDA Global Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. Losses can exceed investments.