US dollar weekly declines after a series of gains

Three central banks lead the events of the week’s session

Keep an eye out for US labor market numbers and Powell’s testimony

Inflation is on the rise in Switzerland

Separate economic data

After inflation figures from Australia and manufacturing and services figures from the United States of America and the eurozone topped last week’s events, financial markets return in a new week and new economic figures will cast a shadow over this week’s trading, led by meetings of three central banks (the Australian Reserve, the Bank of Canada and the Bank of Japan)

in addition to some figures Before we go back to it, we will summarize the most important events of the past week. At the beginning of the week, US durable goods orders numbers for January came in below expectations. Durable goods orders contracted in January by 4.5% (fayezalajmi-4x.com)

On the other hand, the data showed that inflation in Australia slowed by 7.4% in January, below expectations. Inflation in Australia slowed in January (fayezalajmi-4x.com)

The PMI in the manufacturing sector contracted for the fourth consecutive month in February, the ISM Manufacturing index contracted for the third consecutive month (fayezalajmi-4x.com)

Inflation in the euro zone recorded an annual rise of 8.5% in February in the preliminary reading, slowing from 8.6% in January. Inflation in the euro zone exceeded expectations in February (fayezalajmi-4x.com)

The movements of the US dollar were affected by the statements of the US Federal Reserve members during the week and the movements of US bond yields.

The US dollar general index recorded losses of 0.70% last week, the first weekly decline in four weeks, in the longest series of gains since May 2022, to conclude the weekly session at 104.50 levels.

The US dollar was affected in the closing session of the week and recorded declines after the statements of the US Federal Reserve member, Rafael Bostick, that he prefers to raise the interest rate by 25 basis points in March, and that the Fed will adjust its interest rate expectations if the data is strong.

Bostick’s statements at the end of the week contradicted the hard-line statements of the rest of the Federal Reserve members last week (Neil Kashkari – Christopher Waller – Barkin), which supported a stronger hike in interest rates. last year .

Futures forecasts using CME’s FEDWatch tool are now seeing a 50 basis point hike in interest rates at the March meeting of about 28.4%, compared to less than 10% early last week, while seeing peak US interest levels at 5.4% or higher.

The movements of the euro and the pound sterling were the strongest during the past week with the declines of the US dollar, as the euro rose by about 90 points to close at 1.0635 levels, while the pound sterling closed at 1.2040 levels with gains of more than 80 points.

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 it leads the meetings of three central banks (the Australian Reserve, the Bank of Canada and the Bank of Japan), in addition to the testimony of Jerome Powell, the US Federal President before the Finance Committee in Congress, and the numbers of the American and Canadian labor market and rates UK growth events this week

. Reserve Bank of Australia

The Reserve Bank of Australia will hold its meeting tomorrow morning, Tuesday, March 7, in the Asian session, where expectations indicate that the bank will raise interest levels by 25 basis points, to reach 3.60%, an increase for the tenth month in a row, to reach its highest levels in nearly a decade.

Inflation in its last reading in January and issued last week showed a rise to 7.4% on an annual basis from 8.4% in December, while the main index excluding food and energy prices recorded a growth of 7.2% from 8.1%.

The slowdown in inflation in the January reading may support a less-than-expected tightening policy from the Australian Bank, especially since the markets were expecting two additional hikes by 25 basis points after the March meeting, and therefore the markets will monitor the bank’s view of the recent inflation numbers and its expectations for peak interest levels.

Central Bank of Canada

The Central Bank of Canada will announce its monetary policy on Wednesday, March 8th in the American session, as it is expected to be the first bank among the major banks to stop tightening monetary policy and raise interest rates and keep them at 4.5%.

At the bank’s last meeting at the end of January, the bank raised interest rates by 25 basis points to reach 4.5%, while indicating that the board will maintain the current interest rate, but is ready to intervene if necessary to bring inflation back towards the bank’s target.

Inflation in Canada grew by about 5.9% in January on an annual basis, compared to 5.3% in December, better than expected, while the main index, excluding gasoline prices, rose to 5% on an annual basis, from 5.4%.

After the recent inflation figures, which were contrary to the bank’s expectations, the markets will monitor whether the bank will apply further increases in interest rates, whether inflation continues to rise or if it closes this door and will go to reduce interest rates by the end of this year.

Central Bank of Japan

BOJ Governor Kuroda will hold his last meeting this week before leaving office to Ueda, the new candidate. Kuroda is expected to keep monetary policy unchanged at Friday’s meeting, leaving negative interest rates and continuing to allow the volatility of 10-year bond yields minus or plus 0.50%.

The Japanese Consumer Price Index (CPI) recorded a growth of about 4.2% in January, compared to 4% in December, to record the highest inflation reading since 1981.

Many members of the Bank of Japan, including the new governor, Ueda, believe that the recent rise in inflation is driven by the high costs of importing raw materials and not strong demand.

Therefore, it is not expected to continue for much, and therefore confirms this view and expectations that the bank will continue its accommodative policy for a longer period than expected.

Labor market figures and Powell’s testimony

It is expected that the US labor market figures for February will be released by the end of this week, Friday, which is the last before the Bank’s meeting in March, as the US economy is expected to add about 215,000 jobs in February after adding 517,000 jobs in January, and that the unemployment rate will remain unchanged at 3.4%.

. After the recent job numbers in January, market fears and expectations rose that the US Federal Reserve will continue to tighten monetary policy and go further than expected.

Therefore, the February numbers will be decisive in determining trends, and whether the January numbers were just a coincidence or a continuation.

The markets will hear the testimony of US Federal Reserve Chairman Jerome Powell before the Senate Banking Committee tomorrow, Tuesday, in the Congressional Building, and will complete it on Wednesday in front of the House of Representatives.

It is expected that Powell will discuss monetary policy in front of members of Congress and highlight the bank’s expectations and directions for inflation, interest rates and growth in the coming period, which will cast a shadow over the market movements in the middle of the week, especially with regard to Powell’s expectations regarding the Fed’s move by 50 basis points in the March meeting, for which expectations rose. By more than 30% last week. Inflation in Switzerland is on the rise Data from the Federal Bureau of Statistics (FSO), released this morning,

showed that the Consumer Price Index (CPI), which measures inflation in Switzerland, rose to 0.7% in February from 0.6% in January, better than expectations, which indicated an increase to 0.6%, while the index rose to 3.4% on an annual basis.

The main index, which excludes food and energy prices, rose to 2.4% year-on-year, after rising by 0.8% in February.

Separate data that we follow during the week

Today, Monday, we will monitor retail sales for the eurozone in the European session, while we will follow the Canadian PMI and US factory orders in the American session.

Tomorrow, Tuesday, the Reserve Bank of Australia will announce the results of its meeting in the Asian session, while we will follow the testimony of Federal Reserve Chairman Jerome Powell in the American session.

On Wednesday, we will monitor the Italian and German retail numbers and the German manufacturing production index in the European session, while the Central Bank of Canada meeting and the US private sector employment numbers ADP will lead the events of the American session.

Thursday, we will be with the inflation figures from China in the Asian session, while the weekly unemployment benefits figures from the US economy will be released in the American session.

The meeting of the Central Bank of Japan topped the events of the Asian session at the end of the week’s trading on Friday, while we will monitor the growth figures from the United Kingdom in the European session, and the American and Canadian labor market numbers will be announced in the American session.