The US dollar is at its highest level since May 2020
The European Central Bank and inflation data are the most important events of the session
Commodity currencies are rising despite the strength of the US dollar
Miscellaneous data we will follow during the week
The markets re-ignited at the beginning of the week today, Monday, the 7th of March again, as currencies and assets from the category of safe havens rose strongly with the escalation of skirmishes in the Russian-Ukrainian war and the increase in sanctions imposed on Russia from the West, raising speculation that these sanctions may put additional pressure on the levels of growth and global inflation Especially after the American threat to ban Russia’s exports of oil and natural gas.
With all these stimuli that support safe haven currencies such as the US dollar and the Japanese yen, the markets are awaiting many economic data that will be released this week, but the most important of them lies in the European Central Bank meeting and US inflation data next Thursday, in addition to the Canadian labor market data that will be released at the end of Friday week.
The US dollar, after recording gains by about 1.30% last week, by closing the weekly session at 98.47 levels, returns to rise again this morning, and records gains by about 0.33%, by trading it now at 98.90 levels, trading at its highest level since May 2020. Commodity currencies (the Australian dollar and the New Zealand dollar) are trading in contrast to the US dollar, as they benefit from the rise in commodity prices to historical levels in light of these fears of declining supply and logistical transport problems.
The past was at 0.7415 levels, while the New Zealand dollar is trading at 0.6900 levels, about 50 pips high today. European Central Bank Members of the European Central Bank will meet next Thursday, the 10th of March, to discuss monetary policy and take decisions regarding interest rates, as the markets expect not to change monetary policy at Thursday’s meeting and to maintain zero interest rates.
The European Central Bank
is the last bank expected to raise interest rates, as the bank is expected to wait until the last quarter of the year for the first rate hike in more than a decade. Prior to the Russian invasion of Ukraine, expectations were that the first move from the European Central would come before the end of the year and might be in the third quarter, especially after record inflation roses after the consumer price index reached 5.8% in February, but these expectations fell by half to the last quarter of the year after Russian invasion and rising uncertainty.
The Russian-Ukrainian war directly affects the European region and thus the expectations of inflation and growth for the euro area, where investors will focus in Thursday’s meeting on the Bank’s expectations of growth and inflation in light of this crisis.
US inflation
data The Consumer Price Index (CPI) from the United States of America, which is concerned with measuring inflation, will be announced on Thursday, as estimates indicate a rise in annual inflation in February to 7.9% or 8%, as the Russian-Ukrainian conflict caused a change in expectations and prospects for a period of high inflation.
Rise in commodity prices, such as oil prices, which are recording high levels compared to the period before the Russian war and the continuation of the supply chain crisis are all factors that support the rise of US inflation to levels that are the highest in forty years.
Expectations of a US interest rate hike at the March meeting are still at 92% over a quarter-point hike, according to the CME FedWatch tool, but any hikes that exceed expectations for inflation will raise expectations for a 50-basis-point hike at the March meeting.
Canadian Employment
Data The Canadian economy is expected to add about 160 thousand jobs in February after losing 200 thousand jobs in January, and the unemployment rate is expected to decline to 6.3% in February compared to 6.5% in January’s reading.
Various data that we will follow up during the week Today, Monday, in the European session, we will follow the German factory orders and retail sales index.
On Tuesday, we will follow the German industrial production index and the Italian retail sales.
On Wednesday, we will follow the Italian industrial production in the European period, while the vacant jobs index and the labor turnover rate will be released in addition to the American crude stocks in the American session.
Thursday, attention will turn to the European Central Bank meeting in the European session, while inflation data will be released from the United States of America in the American session.
Friday, the last session of the week, we will monitor inflation, unemployment rate and retail sales data from the second largest economy in the world (the Chinese economy) in the Asian session, while a group of miscellaneous data will be released from the United Kingdom (industrial production – trade balance – services index) in the European session, labor market data Canadian (unemployment rate – change in employment) will be released in the US session.
05/11/2024
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