Forex Today: Bank of England Sparks Global Risk Rally

The Bank of England’s dramatic move in resuming QE triggered a global risk-on rally which saw the US Dollar give up some of its recent gains.

   

  1. The US Dollar was continuing to rise to multi-year highs yesterday when the Bank of England announced that it would effectively resume its QE program by intervening in the bond market to buy Gilts on an ongoing basis. The announcement sparked a global risk-on rally, seeing stocks and commodities rise, while riskier currencies such as the British Pound and the Euro gained strongly against the US Dollar. US Treasury Yields also fell, with the 10-Year Yield falling sharply back from the 4% area it had previously touched. It remains to be seen whether this is a major long-term reversal, but there are increasing signs that we may have seen a bottom in the GBP/USD currency pair, and possibly also in the EUR/USD.
  2. The US Federal Reserve member Evans sees US interest rates peaking in March 2023.
  3. Despite yesterday’s bullish price movement, it is important to note that some major indices traded at long-term lows yesterday, most importantly the S&P 500 Index and Gold which made new 2-year low prices.
  4. After earlier reaching a 14-year low against the US Dollar, the Chinese Yuan has recovered on the back of the global risk rally, helped by a warning to speculators issued by the People’s Bank of China.
  5. There will be a release later today of Canadian GDP data. Analysts are expecting a month-on-month decline of 0.1%.
  6. Hurrican Ian has made landfall in Florida, USA, leaving 2 million people without electricity and causing severe flooding in the south-west of the state.
  7. Daily new coronavirus cases globally dropped last week for the tenth consecutive week, giving rise to the hope that the pandemic is finally over in any meaningful sense. Last week, President Biden declared the pandemic “over”.
  8. It is estimated that 68% of the world’s population has received at least one dose of a coronavirus vaccination, while approximately 7.9% of the global population is confirmed to have contracted the virus at some time, although the true number is highly likely to be much larger.  
  9. Total confirmed new coronavirus cases worldwide stand at over 621.8 million with an average case fatality rate of 1.05%.  
  10. The rate of new coronavirus infections appears to now be significantly increasing only in Taiwan and Russia. 
Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.
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