Global equity markets suffered heavy losses in the first half of this week, however sentiment stabilized in the second half as stocks started to recover. The dollar took another step back, oil prices fell below $110 per barrel. The first positive news appeared on reopening of China economy after a period of severe social restrictions, some signs of de-escalation in Russia-EU relations emerged as well, in particular, EU appears to have accepted Russia’s scheme of gas payments.

The situation on the foreign exchange market reflected a decrease in risks, both geopolitical and inflation, which was primarily expressed in greenback retreat, which has been rising all this time due to the fact that US assets were perceived as the best place in terms of risk-reward ratio.

Over the next week, the downward trend in risks, or at least in perception that risks are decreasing, is likely to continue, which should have slightly negative consequences for the dollar. The pound and Euro may still rise against the dollar, EURUSD rally could reach 1.0650, GBPUSD could test 1.25. Other currencies of the G10 countries will likely rise against the Dollar as well.

On Monday, the head of the British Central Bank Bailey will deliver a speech, in light of strong recent data on the UK labor market, there may be more determination to tighten policy, which should be reflected in Bailey’s remarks. RBNZ will hold a meeting and the Fed will release the Minutes of its last policy meeting on Wednesday. Powell was pretty clear this week about his commitment to tackle high inflation so the Minutes may contain little surprise and cause moderate market reaction.