Johnson's Risky Rate, FOMC Protocols and Oil

7 Jul 2021

Following Biden, recently officially announced the end of the pandemic in the US, Boris Johnson was quick to announce that the UK government plans to cancel almost all legislative measures introduced to combat the virus from July 19.

In our opinion, he hastened: that's putting it mildly. By and large, Johnson's actions are a bet. Moreover, the rate is very risky. The fact is that in the United States, the situation with the pandemic looks, if not resolved, then controlled with an exceptionally positive trend in the development of the situation. In the UK, at the start of the week, the number of new cases exceeded 27K. And a little over a month ago, the number was about 2K. That is, an increase of more than 10 (!) times, and against this background, antiquarian measures are not intensified, but in general are completely canceled. In our opinion, this bet can play a cruel joke. So the sale of the pound continues to be relevant.

In general, purchases of the dollar in general on the foreign exchange market after the recent local correction look very attractive. Yes, the markets have somehow forgotten about the Fed's updated estimates on the timing of the rate hike, but today's FOMC minutes may well remind us that monetary policy in the United States will tighten in the foreseeable future, and inflation is a real threat that cannot be ignored forever.

One of the sources of inflation, oil prices, yesterday, however, somewhat eased the upward pressure on prices. In this light, we cannot but recall our yesterday's recommendation to sell oil, the relevance of which has not only not decreased, but even increased.