Geopolitical uncertainty and expectations regarding the Fed shape the markets.
In the context of the Fed's monetary policy, Federal Reserve Board member Logan suggested that moderately higher interest rates could better balance economic prospects and risks, indicating the possibility of future rate hikes. Currently, market expectations for the upcoming FOMC meeting indicate that rates will remain in the range of 3.50-3.75 with a probability of 89.8%. Only 10.2% of the market expects a hike to 3.75-4.00. Initial jobless claims in the USA were 208 thousand, which was better than forecasted, which may influence the Fed's decisions. A stable labor market situation may support the scenario of further stabilization or moderate rate hikes.
Significant events have taken place in the Middle East region, where the American military has conducted new attacks on Iran. These actions may lead to further escalation of tensions, especially in the context of reports that Iran is urging the Houthis from Yemen to close the Bab el-Mandeb Strait, which could significantly impact maritime transport and oil prices. Additionally, explosions heard in downtown Dubai raise concerns about stability in the region. Such events may increase uncertainty in financial markets, affecting commodity and currency prices.
Macroeconomic data from the United Kingdom showed that industrial production increased by 0.1% month-on-month, exceeding forecasts that predicted a decline of 0.2%. The estimated GDP rose by 0.7% on a quarterly basis, which was also better than expected. Year-on-year, GDP increased by 1.3%, which is in line with forecasts. This data indicates a stable economic situation in the United Kingdom, which may have a positive impact on the British pound and local markets.
Tomorrow's events will continue to be dominated by monitoring the geopolitical situation in the Middle East and expectations regarding Fed policy. Investors will try to assess the impact of these factors on global financial markets, especially in the context of oil prices and currencies. It is also worth observing further macroeconomic publications that may influence investment decisions.
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