The US dollar gained for the fourth consecutive week

Markets are awaiting inflation figures from Australia and ISM manufacturing figures

The Japanese yen exceeds 136

Separate economic data

After the meeting of the Reserve Bank of New Zealand, US inflation figures and the Federal Reserve minutes of last week’s events, financial markets return in a new week and new economic figures will cast a shadow over this week’s trading, topped by inflation figures from Australia and the eurozone, in addition to manufacturing figures from the ISM Institute, US commodity orders, Canadian growth figures and statements This is from the heads of the central banks, in addition to some separate figures, and before we go back to them, we will summarize the most important events of the past week.

At the beginning of the week, the euro area and the United Kingdom announced the manufacturing and services PMI numbers for February, the increase in the services index for the United Kingdom and the euro area (fayezalajmi-4x.com)

On the other hand, inflation in Canada rose in January on an annual basis by 5.9%, while retail sales rose by 0.5%. Annual inflation in Canada slowed in January, better than expectations (fayezalajmi-4x.com)

The Reserve Bank of New Zealand raised interest rates, as expected, by 50 basis points at its first meeting in 2023, last Wednesday, to reach 4.75%.

The Reserve Bank of New Zealand raises interest rates by 50 basis points (fayezalajmi-4x.com)

The US Federal Reserve’s minutes of its meeting in early February supported the pace of monetary tightening, as some members preferred to raise interest by 50 basis points.

The US Federal Reserve’s minutes support the dollar’s gains (fayezalajmi-4x.com)

Japan recorded consumer price inflation, the highest in forty years, in the January reading of 4.2%, while Ueda did not make any statements about the bank’s tightening of monetary policy soon. Inflation in Japan is at its highest level in four decades (fayezalajmi-4x.com)

We concluded the week with the data of the PCE, the preferred indicator for the Federal Reserve for inflation, and the markets reacted strongly with some security that exceeded expectations. Inflation in Japan is at its highest level in four decades (fayezalajmi-4x.com)

The general index of the US dollar recorded gains of 1.40% last week, with gains for the fourth consecutive week, when it closed at 105.23 levels, its highest level in 2023, benefiting from the high market expectations for additional tightening of monetary policy from the US Federal Reserve.

Futures forecasts by CME’s FEDWatch tool now see a 50 basis point hike in interest rates at the March meeting by about 27%, compared to less than 10% at the beginning of last week, while it now sees peak levels of US interest at 5.4% in July and above 5% until the end the current year.

The movements of the Swiss franc and the Japanese yen were the strongest during the past week with the gains of the US dollar, as the Japanese yen fell by more than 200 points, surpassing 36 levels for the first time since December of last year, while the Swiss franc traded at the highest levels of 0.9400 against the US dollar.

What will we watch this week?

Attention is directed during the sessions of this week to many economic data that will have a direct impact on currency movements, as inflation figures from Australia and the Eurozone take precedence, in addition to manufacturing figures from the ISM Institute, US commodity orders, Canadian and European growth figures, and statements from the heads of central banks (Japanese, New Zealand and the Bank of England) This week’s events.

Inflation and growth of Australia

The markets are awaiting inflation figures from Australia in the Asian session, in addition to growth figures for the fourth quarter of last year, as inflation is expected to slow in January by 8.1% on an annual basis from 8.4% in December, which is the highest in 33 years.

After the strong figures in December, the Reserve Bank of Australia raised interest rates by 25 basis points at its first meeting of the year on the seventh of January, after it was about to stop raising interest rates, and therefore the inflation figures this week come with high expectations for the continuation of interest rate hikes to limit the rises. inflation.

The markets are currently pricing in an increase in interest rates by about three times from the Australian Reserve after the recent inflation figures, and therefore any figures better than the market’s inflation expectations may raise the market’s anxiety and the Reserve Bank of Australia to the expected peak interest rates, while the slowdown in inflation in January may calm fears.

On the other hand, Australia is expected to report economic growth of about 0.7% in the fourth quarter of last year, compared to a growth of 0.6% in the third quarter.

Yen exceeds 136

The markets witnessed the first statements of the Governor of the New Bank of Japan, Ueda, last week, Friday, in the parliament session, as he extended what the markets were expecting regarding the governor of the accommodative monetary policy of Kuroda for a longer period than expected, as Ueda indicated that he was not in a hurry to amend the controversial policy.

With regard to the rise in inflation to 4.2% in January, its highest level since 1981, Ueda confirmed that it is driven by the high costs of importing raw materials and not by strong demand

. The Japanese yen returned to trading above 136 levels against the US dollar, as Ueda’s statements come in favor of the weakness of the Japanese yen by continuing the stimulus policy for a longer period than expected, while on the other hand, we are expected to witness additional tightening from the US Federal Reserve that supports the rises of the US dollar.

During the current week’s sessions, the markets are looking forward to some economic figures for Japan, such as industrial production figures, retail sales, and the Tokyo inflation index.