Noor Capital | Interview with Mohammad Hashad on Dubai TV – May 6

“Mohammed Hashad, Head of Research and Development at Noor Capital and a distinguished member of the US Association of Technical Analysts, provided insightful commentary and thorough analysis on the latest market dynamics and key asset performances in an exclusive interview with Dubai TV.”

Interest Rate Decision of the Bank of England

The upcoming Bank of England meeting holds significant weight in this week’s trading landscape. There are indications of internal divisions within the Bank of England’s board, a familiar prelude to an interest rate announcement. My analysis suggests a status quo in monetary policy at the upcoming meeting, with potential interest rate cuts likely to commence around June, possibly preceding actions by the Federal Reserve as it targets a 2% inflation rate.

US Nonfarm Payrolls Report

The US dollar experienced a notable decline, relinquishing gains against a basket of US dollar-denominated currencies and commodities. Last week, the US labour market added a modest 175,000 jobs, falling short of expectations of 243,000 and below the revised figure of 315,000 from the previous month. While market sentiment hinted at potential interest rate cuts by the Federal Reserve in the upcoming meeting or in June, my perspective leans toward no immediate cuts. If any adjustments occur, they might materialize later in the year, possibly in late September or December. This stance aligns with Federal Reserve Chair Jerome Powell’s commitment to achieving a 2% target, especially given the positive economic indicators in the United States, signalling a departure from recessionary pressures.

Gold Prices Decline Over Two Weeks

After reaching a multi-month low of $2,272 per ounce, gold prices have rebounded, currently hovering around the $2,325 mark. The uptick in gold prices coincides with a weakening US dollar following disappointing job data. Lower interest rates could potentially benefit US currency-denominated commodities. Investors are closely monitoring the crucial $2,325 level, a breach of which could propel prices towards $2,360 and $2,370. Conversely, failure to sustain trading above $2,300 may trigger a downward correction, targeting $2,260 per ounce.

Japanese Yen and Bank of Japan’s Interventions

Despite the recent plunge of the Japanese yen to its lowest level since 1990, surpassing the 160 mark, the Bank of Japan refrained from intervening in the currency’s abrupt movement. Two primary factors contributed to the yen’s decline: firstly, the Governor of the Bank of Japan’s acknowledgement that despite the yen’s depreciation, it hasn’t influenced inflation levels, signalling a reluctance to intervene. Secondly, the significant interest rate differential of 540 basis points between the Bank of Japan and the Federal Reserve exerted pressure on the yen’s movement.

Looking Ahead

Anticipation mounts for next week’s developments, particularly the Bank of England’s Monetary Policy Committee statement, interest rate decisions, and UK GDP figures.