The market-moving event this week: the European Central Bank decided to raise rates by 75 bp, so now deposits are yielding (are you ready?): a grand total of 0.75%. Back up the truck! Note: the ECB previously had negative rates from 2016-2022. Wolf has the charts:
ECB Shocked, Shocked, to Find that Inflation is Going on in Here, Hikes by 75 Basis Points, After 50-Basis-Point Hike in July (Source – Wolf Richter).
The unexpectedly large rate increase by the ECB – after remaining below zero for half a decade – caused the Euro to rebound more than a point, closing the week at 1.0043, up +0.13%. Yay Euro!
I made a bold prediction to a friend of mine last week: “Oh, the Euro won’t recover until we have peace over there.” Well, it turns out, a big unexpected rate increase can move the needle too. That said – looking at the weekly chart below, the surprisingly big rate increase just seemed to staunch the bleeding, rather than turn things around. My candle model assigned a poor rating to this week’s “long-legged doji” candle print for EUR/USD. So far, no reversal.
I do have a question though: will raising rates address the massive price increases caused by shortages of natural gas and electricity in Europe, which in turn were caused by “sanctions” on Russia? I’m thinking no.
While gold didn’t do all that well (up just +6.93 [+0.35], with the buck down -0.47%), silver and the miners staged a strong recovery. Silver was up 0.89 [+4.72%] on the week, rising five days out of five. Also, silver’s Open Interest (OI) fell during the week while price moved higher. This feels – maybe – like a “short squeeze” of some sort. When silver outperforms gold, it is usually a bullish signal. I’ve heard rumors that physical silver is hard to come by right now. It may be that the banksters are worried about having to actually deliver silver to the Commodity Exchange (COMEX) longs, and so these same banksters are cashing in/closing out their shorts at a profit while they can. I mean, maybe. (Full disclosure: I’m long silver via the Sprott Physical Silver Trust [PSLV]).
There is also the miner index, which jumped 6.60% on the week.
by thc0655 
