Now you are reading
Concerns about economic growth - capital is running out of risky assets

Concerns about economic growth - capital is running out of risky assets

created Marcin KiepasAugust 22 2022

The week in the financial markets started with concerns about global economic growth. This causes you to run away from risky assets. And what will determine the moods in which investors will end it? There will be two events in the first place.

Eurodollar at 1,0000

The correction of gains in recent weeks is sweeping through the global stock markets. EUR / USD exchange rate after a month-long break, it returns and attacks the parity, which indirectly overestimates the zloty and other currencies in the region. 

EURUSD Daily_fxclub_22082022

Daily chart EUR / USD. Source: Tickmill

Gold cheaper sixth consecutive day. Bitcoin is also slightly cheaper, as it fell significantly last Friday, breaking the bottom from the 3-month upward channel, which may now herald a decline towards the bottom of June. In a word, risk aversion is growing strongly in the financial markets today. They drive  concerns about economic growth. And this on several levels. Starting with the weakening Chinese economy. Through fear of a deep recession in Europe caused by the ongoing and growing energy crisis. And ending with concerns about the potentially negative impact of large interest rate hikes in the US on the condition of the local economy.

What awaits us this week?

Fear for economic growth will remain the main topic until the end of the week. On the other hand, market expectations as to the future economic situation will be shaped by two groups of events. 

On the one hand, these will be the preliminary readings of August indices released on Tuesday PMI for the industrial and service sector from Japan, through the largest European economies (France, Germany, the entire euro area and Great Britain), and ending with the USA. This publication will be supplemented by the Ifo index for Germany. 

The second major event will be the symposium of central bankers in Jackson Hole, which starts on August 25. Especially the Fed chairman Jerome Powell's speech scheduled for Friday. It should put the proverbial dot on the scale of the September interest rate hike in the US. The markets are currently assuming the Fed will raise them by 50 basis points. 

What do you think?
I like it
Heh ...
I do not like
About the Author
Marcin Kiepas
Tickmill UK analyst. Financial markets analyst with 20-year experience, publishing in Polish financial media. He specializes in the foreign exchange market, Polish stock market and macroeconomic data. In his analyzes he combines technical and fundamental analysis. Looking for medium-term trends, examining the impact of macroeconomic data, central banks and geopolitical events on the financial markets.