Fed’s Tightening Cycle may Conclude

Global markets enjoyed a transient period of stability in April, while worries about the recent banking system events still echoed. In the FX complex, it was the euro’s turn to shine amid a combination of falling energy prices, encouraging economic releases, and expectations that the ECB will keep raising interest rates through the summer.

In contrast, the US dollar continued to lose ground, pressured by speculation that the Fed is about to conclude its own tightening cycle. But the real underperformer was the Japanese yen, which hit a 15-year low against the euro after the Bank of Japan once again refused to tighten policy. Meanwhile, gold prices remained on an upward trajectory, benefiting from a slight decline in US yields and the dollar’s sluggishness. Demand for bullion has been further enhanced by central bank purchases this year, most notably from China.

April closed on a positive note for the IXI Fund. However small, the return bears significance as it was achieved in a demanding market environment, where erratic price movements throughout the month reflected the overall nervousness in the global economy. The strategy eventually managed to capitalize on a solid market direction towards the end of the month, following the Bank of Japan’s policy meeting. Overall, by the end of April the strategy attained a new high watermark, fortifying last month’s solid returns.

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