The changed weather hit the dollar, blew the gold

Global markets, especially Wall Street, wanted to celebrate Christmas with a rally. While the markets saw the glass half full in the fight against inflation, the Fed emphasized the empty side. Fed officials did not allow the year-end rally with their statements. Because making money in the financial markets with the wedding holiday atmosphere would hinder the fight against inflation.

An unexpected development in the arm wrestling between the Fed and Wall Street changed the situation in favor of the markets. This development was that half of the five-month winter season in the northern hemisphere of the world was quite mild.


The fact that the winter months do not pass as expected and there is a period of 2-2.5 months until the spring causes the energy bills to be lower than feared. It also strengthens Europe’s energy stocks.

➔As a result, natural gas prices fell before the Ukraine War.

The decline in oil and energy prices showed a positive effect on inflation.. The 9 percent decrease in gasoline prices was effective in the rise of December inflation at the level of 6.5 in the USA.

It is interpreted that the fact that winter conditions do not create extra demand for natural gas and oil will significantly reduce inflation in the coming months.

These developments reveal the strategic importance of energy from life to economy. The crux of the matter was energy. From the economy to markets to life, it changed the rules of the game.

➔The employment and inflation data announced in the USA last week contributed to the change in the atmosphere. While the slowdown in the economy becomes more evident, inflation continues to decline. Inflation, which peaked at 9.1 percent in June, dropped to 6.5 percent in December.

In the face of such a situation Expectations that the Fed will not be able to continue its tight monetary policy for a long time have strengthened.


➔Fed officials do not see more than a quarter point increase at the meeting on February 1st. Then, at the next March 22 meeting, there is a high probability that the Fed will be content with a quarter-point increase and stop and wait.

The steps the Fed can take to curb the enthusiasm of the markets are now much more limited than in December.

➔As a result of all these developments, the Christmas rally, which is not allowed at the end of the year, seems to take place at the beginning of the new year.

With an increase in risk appetite The Dollar Index fell 1.6 percent from 103,648 to 101,965 last week.

➔Fed’s slowdown in rate hikes and then halting could mean that the dollar will maintain its current weak level throughout the year.

A weakening dollar It is expected to have a positive impact on the performances of non-US stock market indices and asset prices by increasing the global risk appetite.

➔ During the two-week period of the year While the US stock markets rose 3.5-5.8 percent, emerging stock markets rose 7.7 percent and Europe’s Eurostoxx 600 Index made a premium of 7.4 percent.


The expectation that China will begin to lift the pandemic restrictions and that its economy will recover from the second half of the year is constantly increasing the fire of oil.

➔Oil rose for the seventh consecutive trading day, holding at $85 and It rose 8.9 percent last week.

➔China’s decision to open up and the prediction that central banks will raise interest rates less with the decrease in inflation data, which will reduce the possibility of recession, jumped copper prices. $9,250 a ton copper rose 7.4 percent in the last week.

Cryptocurrencies, which have recently become “children of pain”, have also entered a sharp upward trend. 15.6 percent premium last week Galaxy Crypto Indexof Compared to the end of the year, the increase was 22.6 percent.

The increase in demand for crypto-assets, which have been followed by bankruptcies and pending regulation, is an indication that the risk appetite in the markets has returned. Investing in the crypto market during this period, facing two major risks or uncertainties, shows unusual optimism.


The reasons that weakened the dollar made gold almost fly. The clarification that the Fed will cut interest rate hikes short paved the way for gold prices early.

➔The ounce price last week was 1861 Gold, which rose to $ 1920, gained 2.9 percent. Although the increase in silver lags behind gold, forecasts are made that gold will continue to rise.

➔ Gold, which rose to 2070 dollars on March 8, 2022, after falling to $ 1,615 at the end of September, recovered as the Fed approached the end of interest rate hikes.

The expectation that the demand for gold will increase with the opening of China after 3 years also plays a role in the recovery of gold.

There is also demand from the Central Bank of China. It is estimated that the bank is more willing to strengthen its gold reserves in order to diversify its reserves and reduce the risk of US treasury papers, especially within the framework of trade wars.


The change in the weather has also changed the rules of the game in financial markets. Mild seasonal conditions reduced energy use, preventing a mid-winter energy crisis.

➔ However, the snow that does not fall on the mountains in winter will melt in the spring and there will be no water to flow into the rivers. We saw last summer that scarcity of water is negatively affecting electricity generation and transport in rivers in Europe.

Drought or lack of precipitation reduces the actual agricultural production. Weather change or climate disruption reflected as a low energy advantage for heating in winter It could well turn into a problem of food shortages and food inflation in the summer.