Calmer trading conditions in the latter half of the week. Tensions in the Middle East are alive and well but have not escalated any further since the initial exchange. When asked whether the US would enter to conflict, president Trump responded by saying he would wait two weeks before announcing a decision, creating a window for talks between the two factions. US markets were closed yesterday but futures edged down late on Thursday. The Dollar has been relatively flat over the past couple of days, unmoved by the Fed’s decision to maintain rates at 4.5% on Wednesday.
The Fed was not alone in this regard. Central banks from around the world chimed in with various adjustments to their national currencies this week. In Europe, the trend was heavily in favour of rate cuts, as Switzerland, Sweden and Norway all slashed rates on their respective currencies. Safe-haven flows towards the Swiss Franc have heavily appreciated the currency this year, forcing it to multi-year highs versus the Dollar and prompting the Swiss National Bank to reduce rates to zero yesterday. In Sweden, meagre growth prospects are allowing room for more stimulus, which the central bank was all too happy to provide in the form of the seventh rate cut since last spring. Norway meanwhile enacted its first rate cut in five years as inflation concerns in the Nordic state are finally showing signs of abating. Further afield, the rest of the world by and large held rates steady. The US, the UK and Japan all remained steadfast this week, with the US and UK maintaining much higher rates than those observed in the rest of the world.
The rise in crude oil prices threatens most of Europe with lower growth in a way that the US is largely immune to, given its large domestic shale operations. Speaking of which, oil prices edged higher this week, with Brent Crude futures hovering around $77 a barrel this morning while WTI futures rose above $75. While the conflict between Israel and Iran has driven crude prices higher, the same cannot be said for gold, which continued to bleed lower this week, dipping below $3,350 an ounce this morning.
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