The US dollar recorded its worst weekly performance in more than a year
Euro star of the week
Market expectations rise for a half-point hike in US interest rates in March
Inflation on top of the week’s events
After major events and dates witnessed by the markets during the first week of February last week, on top of which were the meetings of three central banks and the US employment data, calm returned to the markets this week, as strong economic data were absent during the current week, with the exception of some sporadic data that we will follow from here and there similar to the US inflation data British growth.
A quick look at the main events of the past week
We started the week with the meeting of the Reserve Bank of Australia, which kept its monetary policy unchanged at the beginning of the week and announced stopping the quantitative easing program and buying bonds.
The Reserve Bank of Australia keeps interest rates and stops the bond buying program (fayezalajmi-4x.com) The second central bank that announced Thursday is the Bank of England, which decided to raise interest rates by a quarter of a point to 0.50%, as expected.
The Central Bank of England raises interest rates by 25 basis points, and the pound sterling exceeds 1.36 (fayezalajmi-4x.com)
On the other hand, the most prominent change came during the last week of the European Central Bank meeting, which changed its tone in the press conference, considering that inflation exceeded the expectations of the bank, which opened the door to raising markets expectations that we will witness a rate hike during the current year compared to previous expectations that the first rate hike we will witness in 2023 European Central Bank keeps monetary policy unchanged and Lagarde supports the euro (fayezalajmi-4x.com)
At the end of the week, on Friday, both the United States of America and Canada announced labor market data, as the American economy added 467 thousand jobs in January, exceeding expectations, while the Canadian economy lost about 200 thousand jobs. The American economy added 467 thousand jobs in January, contrary to expectations, and the Canadian economy lost 200 (fayezalajmi -4x.com)
The employment data released at the end of the week reduced the pressure on the US dollar that it has been exposed to since the beginning of the week after the data raised markets expectations of a faster tightening of monetary policy, as expectations of futures contracts rose by a half-point rise in the March meeting to more than 32% after the employment data after That it was below 15% before the data and thus supported the rise of the US dollar by the end of the week.
The general index of the US dollar recorded the largest weekly loss in more than a year at the close at 95.45 levels, a loss estimated at 1.75% during the past week, and it is trading on Monday morning, up by about 0.10% at 95.55 levels.
Euro star of the week
The euro topped the scene during last week’s sessions and was an undisputed star, as the euro achieved gains against the dollar by more than 300 points at the closing at 1.1450 levels, to put pressure mainly on the movements of the US dollar, as the euro constitutes more than 65% in the dollar index block, and any strong movements in the The euro will be directly affected by the US dollar.
The European Central Bank had opened the door to a possible tightening of monetary policy during the current year with the continuous rises in inflation, as Lagarde spoke for the first time about the risks of high inflation, ignoring also for the first time that the rise in inflation is temporary and expressed her concern due to inflation, which reached 5.1% in January.
Bond markets witnessed strong moves after Lagarde’s statements, as the yield on German five-year bonds rose to its highest level in five years, and the markets are now pricing in a two-fold move to interest during the current year, and therefore the euro’s gains are expected to continue in the coming period.
US inflation tops the week’s events The markets will enter a much calmer week compared to last week, as US inflation data leads the events of this week, as inflation is expected to rise for the fifth consecutive month to 7.2% in the annual reading from 7%, the highest reading since 1982, which supports the high expectations for the rise rate of Half a point and therefore supports the continuation of the US dollar’s rises during the current week.
The monthly rate of inflation is expected to slow down in January at 0.4%, compared to 0.5% in December. Miscellaneous data that we will follow during the week Today, Monday, in the European session, we will follow the German industrial production index and the Sentix index of investor confidence, in addition to statements by European Central Bank Governor Lagarde.
On Tuesday, we will follow the statements of Reserve Bank of New Zealand Governor Orr, while the Italian retail sales in the European period and the US and Canadian trade balance will be released in the American session.
On Wednesday, we will follow up on inflation expectations from New Zealand in the quarterly reading in the Asian session, while crude oil inventories will be released in the American session, in addition to statements by US Federal Reserve members Bowman and Meister and Bank of Canada Governor Tiff McClem during the session.
Thursday, the United States of America will announce inflation numbers or the CPI index in the American session. We will also follow the weekly unemployment benefits index and statements by the Governor of the Bank of England Andrew Bailey at the end of the session.
Friday, the last session of the week, we will monitor the statements of the Reserve Bank of Australia Governor Philip Lowe in the Asian period, while the United Kingdom will lead the scene in the European session with a reading of growth in the last quarter, trade balance, manufacturing production and services index, in contrast, the preliminary reading of US consumer confidence and inflation expectations will be released in the American session.
05/11/2024
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