The focus and attention of investors is gradually turning towards central banks while, for many, the dollar remains one of the reference points for operations. Forex. Furthermore, the new monetary policy decisions – objectively more restrictive than in the past – could have consequences in inflationary terms and condition investment choices. Also interest ratesand their fluctuations, are certainly not elements to be neglected.
Q: What have been the most traded instruments since the beginning of the year and why do you think?
A: Investor interest has shifted a lot over the year and we have seen a lot of volatility in the markets which has scared some but encouraged others to participate. At the beginning of the year, the interest was certainly more focused on the energy market which benefited enormously from the conflict in Ukraine and the increase in post-pandemic demand, but then the focus shifted to central banks and their policies have without doubt they helped keep the markets moving. We can also see dollar strength brought about by a number of factors that have helped make the currency so attractive to investors and traders, and while some stocks have been heavily followed, it seems to be a tough year for the majority of the stock market so far. It remains to be seen what will happen in the latter part of the year, especially with the elections in the United States, but it is worth keeping an eye on a wide variety of tools in the near future.
Q: According to XTB data, do retail traders prefer the dollar or are they choosing antagonistic majors like pound and euro?
A: The dollar continues to be favored among traders who see the strength of the greenback as they keep an eye on the decisions of major central banks. While some attempt to anticipate a decline in the dollar, the strength of which has driven major pairs to multi-year lows, many are convinced that the current situation will continue into the foreseeable future, or at least until the macroeconomic situation shows some signs of noticeable change. Meanwhile, some are looking to evaluate some alternatives to the dollar and although the yen is in a moment of weakness it does not seem to have attracted too much attention, while much interest still remains in the other majors. However, both the euro and the pound continue to struggle due to the geopolitical climate, which seems to have frightened some traders who are waiting for a more opportune time to enter the market.
Q: How could a decline in inflation over the long term and a decline in it affect the performance of the stock markets?
A: Equity markets continue to be unstable and uncertain in this tighter monetary policy environment, adopted by major central banks in an attempt to contain inflation that has put pressure on consumers and producers. However, despite these efforts, it appears that inflationary pressures persist for the moment due to a number of factors including the Russia-Ukraine war that has disrupted the energy market. Central banks have hinted that inflation remains the priority for them, but they remain cautious in trying not to frighten investors too much as they try to use the means at their disposal. While it may take some time yet, equity markets could benefit from lower inflation thanks to consumers re-entering the market and also from increased interest in riskier assets. For the moment one thing is certain, the stock market is very uncertain and remains vulnerable to fluctuations in volatility depending on the news and the general economic trend.
Q: As interest rates continue to rise, will the market continue to buy US dollars?
A: The dollar continues to show its strength among the G10 currencies and pushes the majority of pairs as it continues to attract the attention of investors seeking refuge from the volatile and uncertain macroeconomic climate. Although USD has benefited greatly from the Fed’s aggressive policy, particularly as the ECB had to wait a long time before starting to raise rates due to the conflict in Ukraine, there is still room for a drop in the greenback. In particular, this decline could occur under several circumstances which could include a stock market recovery that reduces demand for USD, as well as a change in the US central bank’s approach which in turn would leave room for other currencies that have struggled so far to hold. the step. In any case, the situation remains interesting and it is certainly worth keeping an eye on the disparity in the approach between central banks and how this could herald what lies ahead.
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Macroeconomic scenario, Trading and Forex: the point of the situation
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