The dollar continues to decline at the beginning of the week

Ifo indicator below expectations

Miscellaneous data that we will follow during the week

After the second largest central bank in the world, the European Central Bank, raised interest rates last week by 50 for the first time in more than a century.

From the month of July towards the meeting of the largest central bank in the world to determine the developments of monetary policy and interest rates. The US Federal Reserve’s decision, expected to be announced next Wednesday, has been in control of market movements in recent weeks, sometimes between expectations to raise interest rates by 100 basis points, which supported the rises of the US dollar and raised stock fears, and sometimes between expectations of raising it by about 75 basis points, and pressure on the US dollar’s ​​movements last week. Shares rise.

Expectations rose after the US inflation figures, which came at 9.1% in June, to raise the Federal Reserve interest by 100 basis points, but after the statements of the US Federal Reserve members (Waler and Bullard) that they prefer to move towards 75 basis points, in addition to the economic indicators issued, the probability that the US Federal Reserve will resort to raising interest rates decreased by 100 basis points in its meeting on Wednesday by a large percentage and expectations shifted to erase 75 basis points.

Futures forecasts by CME’s FEDWatch tool today, Monday, show a decline in expectations to 10% compared to more than 80%, the increase rate is 100 basis points, while bets rise by about 75 basis points to reach more than 88%. Another factor pressing the US Federal Reserve during this period is the rise in fears of economic recession in the largest global economy, as the US economy contracted by 1.6% in the first quarter.

It is expected that the preliminary numbers for the second quarter will be announced next Thursday, that is, 24 hours after the Fed’s decision. Any negative numbers mean The entry of the US economy into a recession (recession means two quarters of negative growth).

Balancing growth and inflation is the dilemma that the US Federal Reserve is going through, especially with the continuation of the causes of the Russian-Ukrainian war and the crisis of rising energy, commodity and supply chain prices.

Will the US Federal Reserve succeed in implementing the so-called soft landing and avoiding recession despite the Fed’s continued tightening of monetary policy?

The US dollar, after three weeks of gains, recorded losses last week by about 1.5% at the close of the session at 106.52 levels, after the markets’ expectations of the 100-point hike rate from the US Federal Reserve declined, and it is trading at the beginning of the week today, Monday, at 106.46 levels.

Ifo indicator on the decline

A survey issued by the Ifo Institute a few moments ago, which measures the business climate for German companies, showed a decline in July to 88.6 points, compared to 92.2 in June’s reading, recording the lowest reading in two years, while expectations indicated a rise to 90.

The decline in the index came in July due to rising fears of an expected economic recession in the euro zone, higher energy prices and an expected gas shortage.

Miscellaneous data we will follow up during the week

On the economic data front, the United States is expected to announce durable goods orders numbers on Wednesday and the preliminary reading of growth Thursday, while it will announce the Fed’s preferred indicator of PCE inflation by the end of the week on Friday.

From Australia, the quarterly inflation figures will be announced on Wednesday in the Asian session, amid expectations of a decline in inflation to 1.9% on a quarterly basis and to 4.4% on an annual basis.

The preliminary reading of inflation in the euro zone will be announced on Friday, as expectations indicate a rise in inflation to 8.7% in the preliminary reading for the month of July, compared to 8.6%.

From Canada, the monthly growth record will be released by the end of the week, Friday.