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Interviewed by Dubai TV, Mohammed Hashad, Head of Research and Development at Noor Capital and member of the American Association of Technical Analysts, shed light on the latest developments in the financial markets:
US Jobs Data
The US jobs data came on the positive side as the US economy added 528k jobs, higher than the expectations of only 250k and the highest in 5 months, with the unemployment rate continuing to decline towards 3.5%.
Although the US economy has started the second quarter of this year in a contraction, these positive numbers indicate the strength of the American labour market and that what the American economy is going through is just a slowdown, not a recession, as recession always comes with a rise in unemployment rates and a decline in rates. All of these gave the US dollar a boost in the markets.
Gold
Gold is still caught between slowdown fears and rising inflation, and with geopolitical tensions continuing, gold is returning to play as safe haven to hedge against inflation and market volatility. As a result, we are witnessing a marginal rise around the levels of 1790 dollars per ounce after it was recorded at $1766/ounce, and I think that some technical moves might prompt a retest of 1794 before the decline begins again.
Inflation
The upcoming inflation data could be the focus of the markets, with all investors focusing on it, especially with the jobs data that came on the positive side. I think that the Fed will not back down from its decision, especially since inflation will not subside even with an increase in the average hourly wages on an annual basis to 5%, which is Far from the 2% inflation target, and if the inflation reading comes between 8.9٪, we may witness some soft tone in Fed’s decisions, but if it sticks to its highest level in 40 years, we may see a tougher move from the Fed and a violent reaction from the markets
BoE
The British economy is considered the worst performing among the major economies so far, and it was reflected in the sterling performance, which is one of the biggest losers in the basket of currencies. The Bank of England raised interest levels to unprecedented levels, the highest level since 2008, in the bank’s attempts to tame inflation, reaching 9.4%, Which is expected to touch 13%. I think the British economy is facing a more gloomy economic outlook than the rest of the European bloc, especially with the Russian energy crisis.
What’s the solution?
Continuing to raise interest rates will bear fruit in the long run because expectations indicate that the British economy will enter a slowdown phase and may continue to 2023, and the economy is that the British economy may begin to improve, but the expectations so far are considered gloomy for the British economy.
What are the factors affecting oil prices in the coming period?
The first scenario is that oil continues to decline and is now hovering around its lowest level in several months, with imports from China falling by 9.5%, which is the second largest energy consumer in the world, compared to the same month last year. Still, the idea of tight supplies is trying to support prices from time to time, but I think oil is still on a downward path despite the continuing political tensions.