Analysts of the InvestAZ Investment company reported on the latest situation in the world financial markets this week and what is expected in the short term.

(Increasing uncertainties also increase pressure on the dollar)

"APA-Economics" informs that while concerns about the banking sector, which started in the United States and spread to Europe, led to uncertainties in monetary policy expectations, the FED increased the discount rate by 0.25% to 4.75-5.00% last week.

Stating that the US banking system is "solid and resilient," the Fed said recent developments will result in tighter credit conditions for households and businesses and will put pressure on economic activity, the labor market and inflation.

The FED, announcing its forecasts for the economy, has not changed its forecasts for interest rates for this year.

After the meeting, FED chairman Jerome Pavel, who answered the questions, stressed that the bank will continue to fight against inflation, while assessing the need for more interest rate hikes, he said that they will focus on the incoming data, the changing economic landscape, and especially the unexpected effects of credit tightening.

Although there were no significant changes in the expectations of the currency markets after the meeting, the probability that the bank will lower the interest rates by 100 basis points before the end of the year is felt in the prices of the exchange rates.

However, it is estimated that the bank will not change interest rates at the next meeting with an 80% probability.

Noting that the inconsistency between the Fed and market expectations increases uncertainty, analysts emphasize that market volatility may increase in the coming period.

Also last week, Treasury Secretary Janet Yellen's statements on Wednesday caused increased volatility in the markets.

Yellen, in the meeting she attended in the Senate regarding the budget for the fiscal year 2024, said that there is no work on the insurance of all bank deposits.

Shares of regional banks fell after Yellen's statements.

Yellen tried to soften the perception of risk, adding that she could take additional measures if necessary in remarks to the US House of Representatives on Thursday.

On the other hand, the messages given by Fed officials regarding the future of monetary policy were also in the focus of investors' attention.

On Friday, the dollar index rose to the limits of 102.70 points, taking support from the 101.70 point threshold, against the background of increasing uncertainties due to the impact of mixed macroeconomic indicators.

Inflation indicators such as the Level of Economic Development and the Personal Expenditure Price Index, which will be released this week in America, can seriously affect the course of the trend in DXY.

EUR

Inflation indicators to be announced this week in Germany and the Eurozone may play an important role in the formation of the trend in the EURUSD exchange rate.

According to the analysis, if the upward trend in the dollar index strengthens, the euro may depreciate to $1.05 against the dollar.

GBP.

The GDP indicators to be published in England this week and the announcements of Andrew Bailey, the chairman of the Central Bank of England, may have a serious impact on how the trend will continue in the GBPUSD exchange rate, which finished last week above the level of $1.22.

GOLD.

Last week, despite the contradictory statements of Fed Chairman Jerome Pavel and US Treasury Secretary Janet Yellen, the price of gold per ounce fell by 0.5% weekly and ended the week at $1,979.

Based on the analysis, the Economic Development Level to be published this week in America and England, as well as the inflation indicators to be announced in Germany and the Eurozone, may lead to increased activity in currency markets.

This can cause serious fluctuations in the prices of the precious metal.

If the price of the precious metal per ounce falls below the level of $1962, it may fall again to $1930 and up to $1905.

You can address your investment-related questions to us via the phone number *1234 and the website www.investaz.az.

Analytics Department of "Invest-AZ Investment Company" CJSC

The activity of "Invest-AZ Investment Company" Closed Joint Stock Company is regulated by the Central Bank of the Republic of Azerbaijan.

Based on license No. 087986 dated 09.01.2016, the company operates in brokerage, underwriting (dealer), margin trading (forex), portfolio management of individual investors, market making and other investment services.

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Risk notice.

The above information is purely advisory.

The operations carried out in this activity are included in the high risk group, and "Invest-AZ Investment Company" CJSC does not bear any responsibility for the investment operations carried out based on the above information.