Global markets focused on the US Federal Reserve interest rate hike. With interest to be announced tomorrow at 9:00 p.m., market expectations are set to reach a new dimension. After the dollar became more valuable than the euro for the first time in 20 years, the European Central Bank also moved to raise interest rates. The ECB raised the interest rate by 50 basis points and partially prevented the strengthening of the dollar. In the face of rising interest rate competition, gold prices began moving calmly into the decline zone. Oil prices, on the other hand, continue to decline on fears of recession.
MAIN CAUSE INFLATION
Due to the inflation problem that has affected the whole world, countries have started to act according to their own dynamics. While some countries raise interest rates, some countries use different instruments to contain inflation. Developed countries like the United States and the EU have preferred to raise interest rates in order to avoid the swelling caused by the coronavirus pandemic and the crises of recent years. While the dollar and the euro have strengthened with rising rates, some advantages and disadvantages have emerged for developing countries. While countries that access the commodity in dollars make their net exports in euros, their profit margins have started to decline due to the rising dollar.
The heavy effects of the coronavirus pandemic continue to be cumulatively reflected on the inflation side. Although the pandemic is not yet over, many of the restrictions applied have been lifted by countries. Thus, an explosion in demand emerged. In an environment of low supply and high demand, inflation has started to rise as access to scarce resources has become more difficult.
THE RUSSIAN-UKRAINE WAR IS ALSO EFFECTIVE
While energy policies have been upended by the Russian-Ukrainian war, food logistics disruptions have continued to drive up prices. Russia’s start to sell natural gas and oil in local currency has also left countries opposed to Russia in a difficult situation and created an energy bottleneck. With this movement, which made the ruble overvalued, the ruble is in a stronger position than in the pre-war period. Although the main reason for this is the export of oil and natural gas, the slowdown in imports in Russia’s domestic dynamics and naturally the drop in demand is another reason that makes the ruble valuable.
WHY ARE OIL PRICES UNSTABLE?
Oil prices are volatile due to global economic concerns. Many reasons such as the possibility that the United States will enter a recession and the forecast of a drop in demand, the possibility that the production and logistics network will be interrupted again due to the increase in coronavirus cases in China, the fact that people’s consumption habits began to except due to the increase in inflation, the effects of the Russian-Ukrainian war, etc. creates an imbalance. Oil is trying to find an equilibrium at the $100 level amidst these uncertainties.
GOLD PRICES ARE DOWN
The price of an ounce of gold began to fall under the effect of the increase in interest rates due to inflation. The ounce of gold showed a rapid decline from the $1900 levels and retreated to the $1720 levels. Due to the continued decline in ounces and the rise in the dollar, the drop in grams has not been felt very effectively. The gold gram continues its course with small price movements around 970-980 liras. Although experts predict that it will exceed $1900 for gold, they cannot express it clearly. While investing in gold, market dynamics, global economy and forward-looking directions should be considered.
THE DOLLAR AND THE EURO MAINTAIN STRENGTH
Continued interest rate hikes in the US and EU are keeping their currencies strong. The higher the interest rate, the more money is withdrawn from the market and directed to deposits. The value of silver taken out of the market and hard to reach also increases. The dollar and euro currently remain strong around the world due to rate hikes. In an environment where the cumulative effects will be felt in the future, the dollar and the euro continue to appreciate moderately against other currencies due to the anticipation of interest rate increases.
WHAT WILL THE FED DO?
The US Federal Reserve is expected to move more quickly on the interest rate hike as inflation hits a 40-year high. The Fed is expected to raise interest rates by 75 basis points tomorrow. While the Fed’s rate hike is factored in, Fed Chairman Jerome Powell’s statements are even more important. Powell’s speech, which made market-guiding statements, is highly anticipated.
BULL TRAPS IN CRYPTO COINS
Cryptocurrency markets are not recovering. Experts on cryptocurrency exchanges, who make claims even though they don’t have the authority or expertise to set the stage for manipulation, are making investors lose.
There are no laws or regulations for cryptocurrency markets. No authority examines these markets. So-called experts in emerging cryptocurrency markets, taking advantage of this loophole, give investment advice and do fundamental and technical analysis without any basis, causing the loss of investors.
Cryptocurrency markets also find direction based on activity in the global economy. The market capitalization of all cryptocurrencies is less than $1 trillion.
Bitcoin remained in the bullish trap for a short time and broke above $24,000. Then he came back down for no reason. Bitcoin is trading today at 21 thousand 70 dollars, with a decline of almost 4%. The bull trap has thus victimized millions of investors in the main cryptocurrency.
Ethereum also fell 7%. Ethereum, which is in a short-term bullish trap, is trading at $1415.
When you invest in crypto money, you should direct your investments with your own decision without being influenced by anyone. Since there is no margin limit, your money can reach multiples in one day and drop to zero in an instant. You have to take this risk and invest and continue trading with a stop loss. Target prices, which require trillions of dollars to enter the cryptocurrency markets, should not be met either.
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