Ever since Putin invaded Ukraine, nothing is as before on the markets. Since we get contradicting “news” every day, many times from various sources that can’t be really verified, its been a mess. I am trying to find some common sense in all this…and looking at the USD chart and friday’s PA, if USD doesn’t print a bearish candle, then I will be really surprised. Unless something serious happens in Ukraine, it should drop. Ideal would be some kind of a peace deal, obviously, but I am not expecting that so soon…so just things not getting worse will be good enough for now. As for FED on wednesday…market has already priced in a 50bp rate hike and another 5-6 hikes this year. Now it looks like we will only get a 25bp rate hike next week and probably no more than 2-3 this year. And even that 25bp is not 100% confirmed…but FED will probably do it, just to pretend they are doing something. Obviously, when it comes to inflation, no rate hike would be big enough and they know it…with the post-covid economy boom and the current war in Ukraine, inflation will go up, no matter what. But if they hike rates too quickly, it would be a distaster for the fragile economy. So while normally, a hike would be positive news for the dollar, next week it might do the opposite…
