The week of central banks finally ended and the outcome of their monetary policy for forthcoming months has been announced.

The surprises came from Mario Draghi who announced the end of the QE but also that the rates in Europe will remain unchanged for a long time.

After the announced of the rate raise by the FED, which was by the way already widely discounted, corroborated by a quite solid economic growth forecasts, the outlook of the spread between American and European rates has widened in favor of the dollar.

This led to a solid increase in the value of the US dollar against the main currencies, an increase also justified by the recent decline/slowdown of the European macroeconomic data and by the Italian political events.We believe that this trend may continue even in the medium term, particularly pushing the value of the euro against USD and CHF further downwards.

From the stock exchange front, there is a general weakening of the major equity indices, caused by the worsening of the so-called commercial war, particularly between the United States and China. The actual escalation could potentially bring US customs duties on Chinese assets to a total amount  of USD 450 billion, which is the equivalent to almost the total amount of goods imported into America. We think it is very unlikely that this will fully materialize, we rather believe that, as already seen in the recent past, that an agreement will be found. In the meantime, however, equity markets remain very volatile and if new negative news arrives we expect an extremely volatile and negative phase for equities. We therefore recommend covering market risks, at least partially, with hedging strategies. This “commercial war” is also negatively affecting the market for raw materials in general, with a spill over to the precious metals market which could temporarily decline.