Now: Risk-Aversion Mode Return
Greenback back in action as risk aversion took over the financial markets. The main reason that catapults the sentiment is the statement released by the European Central Bank (ECB) yesterday. During the ECB meeting, the president of the ECB, Christine Lagarde reaffirmed that there will be interest rate hike of 0.25% this July although Investors are hoping for a more drastic measure such as 50-basis point as the inflation pressure is quite on the high side.
On the other hand, Bank of Canada (BoC) let out the result of the bank stress test in which showing that a huge loss will occur to the worlds major bank if a large and long-lasting economic shock happened, but they would remain resilient. The current tightening in the monetary policy would also put the financial system’s resilience to the test and may end up showing the weakness in the system.
10 June 2022