Forex

The strong US dollar performance faded in March as the DXY index declined from a high of $99.37 to 98.10. This performance happened as investors worried about stagflation, a situation where inflation rises while economic growth stagnated. The Fed delivered its first rate hike since 2018 and hinted that it will implement more hikes this year. Another notable event was the inversion of the yield curve for the first time since 2016.

Elsewhere, the British pound declined by more than 1% in March even after the Bank of England (BOE) made its third 0.25% rate hike. It also hinted that it will deliver fewer rate hikes even as the governor warned that the cost of living will continue rising in the coming months. Other central banks that sounded hawkish decisions were the European Central Bank (ECB) and the Bank of Canada.

Economic numbers published in March revealed that inflation in all countries, including Japan and Switzerland, kept rising. Analysts expect that the situation will keep rising because of the ongoing crisis in Ukraine and the supply chain disruption.

Commodities

Commodity prices remained in the spotlight as the crisis in Ukraine continued. Gold remained being under pressure as the risk-on sentiment prevailed. It dropped by over 6.2% from its highest point in March. It ended the month $1,940. Silver tracked the price of gold and plummeted by 7.64% from its monthly high.

The same trend happened in energy prices. While oil price remained at elevated levels, it was lower than its highest point in February. The biggest news in the energy sector was the decision by Russia to demand payment from “unfriendly” countries in rubles.

Another major story was the plan to release over 180 million barrels of oil from its strategic reserves in a bid to lower prices. In total, the Bloomberg Commodity Index declined by 75 from its monthly high.

Indices

Global stocks rebounded in March as investors went bargain hunting following the sharp drop that happened in the first two months of the year. The Dow Jones rose by about 3% while the Nasdaq 100 rose by over 7%. The bullish trend also happened overseas, with indices like the DAX and CAC 40 rising by over 4%.

Economic Events

The Reserve Bank of Australia (RBA) was the first central bank to deliver its decision. The bank continued insisting that it was not ready to start hiking interest rates yet. Another important event was the reading of the country’s budget that provided some stimulus checks and tax cuts. Meanwhile, the Fed, BOE, and BOE hiked their rates while the SNB, ECB, and BOJ held steady. Economic data from around the world painted a picture of rising inflation and falling consumer and business confidence.