Weekly Market Report
Escalating tensions in the Middle East have pushed oil prices higher, creating uncertainty in global markets and supporting demand for the US Dollar due to its safe-haven status. Higher oil and gas prices are raising concerns that inflation may remain elevated globally, which could potentially delay expected interest rate cuts.
The Euro weakened amid risk-off sentiment from the market as the Eurozone is seen as particularly vulnerable to higher oil prices as major oil importers.
Central bank interest rate decisions are expected this week with the Federal Reserve (Wednesday evening), Bank of England and European Central banks (both Thursday) all announcing rate decisions within days of each other.
What this may mean for businesses
o Increased volatility in GBP, EUR and USD exchange rates is possible this week due to multiple central bank announcements
o Higher energy costs may place additional pressure on import prices
o Geopolitical developments can quickly shift market sentiment, leading to short-term movements
o With several central bank interest rate announcements and geopolitical developments driving market volatility, some businesses have looked at hedging tools such as forward contracts to provide greater certainty over upcoming international payments