Four Banks Fight Against Inflation
It will be the hottest week of September, with four central banks’ meetings, five PMI releases, and a lot to trade.
Crucial News For The Following Week
Consumer Price Index in Canada
March 21, 14:30 GMT+2.
Canadian Consumer Price Index for February is published on Tuesday, 21. The market expects that MoM the index will rise by 0.7%. The CPI YoY is expected at 5.9%.
The unemployment rate in Canada is relatively stable – at 5%. Nobody canceled the Phillips curve – the lower the unemployment rate, the higher the inflation level.
Additionally, according to the Ivey Purchasing Managers Index, the prices went higher in February means that the inflation in Canada may grow.
The situation is controversial. On the one hand – the inflation growth must push BoC to increase the rate. On the other hand, American Fed will probably pause in a rate hike after all the problems with the commercial banks.
- The CAD will strengthen if the inflation beats the forecast.
- Otherwise, the CAD will fall.
Instruments to trade: USDCAD, EURCAD, AUDCAD
US Existing Home Sales (Feb)
March 21, 16:00 GMT+2.
The US National Association of Realtors will publish statistics about the situation in the real estate market.
The data is collected from 400 listing boards and local Realtor boards nationwide. Usually, the increase in new home sales leads to more significant existing home sales numbers.
The amount of new home sales increased in January by 670K. Meanwhile, in December, the number plunged to 602K.
As a result, we don’t believe the fact will be much better than the forecast.
- If existing home sales surpass 4.17M USD will rise
- Otherwise, USD may go down.
Instruments to trade: EURUSD, USDCAD, USDJPY
US Fed rate decision
March 22, 20:00 GMT+2.
The US Fed will decide the interest rate on Wednesday. According to CME Fed Watch Tool, the market thinks Fed will leave the rate at the current level with almost a 50% probability. 50% that Fed will increase the rate by 25 bp to 5%.
The inflation in the US is stable (core CPI is 5.5%). The intrigue is, ‘What is at a higher priority for the monetary authorities: to beat inflation or to save the banking sector?’. Most probably, Powell will choose the second option.
It is crucial to listen to verbal signals too. If the Chairman hints that Fed will return to monetary tightening as soon as possible, this will signal the US dollar to rise.
- If Fed increases the rate USD will rise.
- If Fed makes a pause and leaves the rate at 4.75% BUT gives hints about future rate hikes, USD will rise as well.
- If the rate is left at the same level without any hawkish signals from Jay Powell – USD will fall.
Instruments to trade: EURUSD, USDCAD, USDJPY
SNB interest rate decision
March 23, 10:30 GMT+2.
The Swiss National Bank will decide on the monetary policy on Thursday.
There is no surprise here – the rate may be at 1%.
Inflation in Switzerland remains stable at its historical high of +3.4%.
Due to the US situation, SNB won’t hurry in the new rate hikes, but the market may consider CHF a usual safe haven asset.
- If SNB hikes the rate CHF will rise
- If SNB leaves the rate at 1%, CHF may not change.
Instruments to trade: USDCHF
Bank of England interest rate decision
March 23, 14:00 GMT+2.
The inflation in the UK is slightly bouncing back. The current level is 10.1%. It is still very high, but during the last year, BoE acted aggressively and increased the rate to 4%.
Reuters says ‘Interest rate futures put the chance of no change in Bank Rate on March 23 at about 40%, up from 25% earlier on Monday and around 10% last week. Bets on a quarter-percentage point rate hike fell to about 60%.’ That’s quite logical. We don’t believe in a BoE hawkish position. At least not for now.
- If BoE hikes the rate, GBP will rise.
- If BoE leaves the rate at 4%, GBP may fall.
Instruments to trade: GBPUSD, GBPCHF, GBPAUD
US New Home Sales (Feb)
March 23, 16:00 GMT+2.
New home sales statistics are released in the US. Economists expect the number to be +638K (less than the previous month).
Recently Mortgage Bankers Association (MBA) published the 30-Year mortgage rate that is extremely high these days, +6.71%. Mortgage application in February falling for three weeks.
We don’t see any reasons why the US new home sales numbers should increase.
- If New home sales numbers are lower than expected, the US dollar will fall.
- Otherwise, USD may rise.
Instruments to trade: EURUSD, USDCAD, USDJPY
US Durable goods orders (Feb)
March 24, 14:30 GMT+2.
US durable goods orders depend on production, credit rates, and the real estate market.
The real estate market is growing slowly, but problems are apparent. Industrial production is slowing down. Consequently, we don’t think that the durable goods orders will rise.
- If durable goods orders data is lower than -4%, the US dollar will fall.
- Otherwise, USD may rise.
Instruments to trade: EURUSD, USDCAD, USDJPY
Similar
Inflation Risks Return To The Markets
Lagarde says difficult times have come, and the ECB raised the rate not to cause a recession but to stabilize prices. Read the report to learn the freshest news of the day!
ECB Key Rate is in Focus
ECB is ready to take the decision about the key rate. What to expect from officials? Oil prices are high, and economy indicators demonstrate the slowing down in the strongest European economies.
Latest news
Inflation Is in Focus Again
Oil prices are rising and Russia banned the export of its petrol. What's happening in the markets?
Fed’s Rate Pause and UK Inflation Slows
Today's main event for the markets is the FOMC Interest Rate Decision, where the US regulator is widely expected to keep the interest rate at the same level of 5.5%.
GBPUSD May Strengthen Resulting the Fed and The BOE Meetings
In today's market insights, we delve into Citibank's oil price predictions, the evolving competition between Huawei and Apple, the Saudi Arabia-Tesla partnership, and the upcoming rate decisions from the world's major central banks.
