Will PCE decline in April?

Turkish Bank meets Thursday

Statements by central bank heads on the sidelines of the Davos conference

What are the markets waiting for this week?

After six weeks of consecutive gains for the US dollar index, the index recorded its first weekly decline when it closed for the last trading sessions last week, with a loss of about 1.55% when it closed the week at 103 levels to complete its declines this morning, Monday, as the US dollar loses the relationship between the decline in risk appetite in the markets and the strength of the dollar Resulting from being one of the most important safe havens in the markets, the major currencies, the euro, the pound sterling, the yen and commodity currencies are rising strongly.

The markets are awaiting many economic data this week, as the meeting of the Reserve Bank of New Zealand and the minutes of the US Federal Reserve, in addition to the statements of the heads of central banks, are leading the events of this week, while the market’s fears of an expected global economic recession continue to directly affect market movements.

Reserve Bank of New Zealand

On Wednesday, in the weekly session, the Reserve Bank of New Zealand will announce its monetary policy and interest rates, as the markets expect a significant increase in interest rates, up to 50 basis points, to reach 2%, the highest interest level since 2016, while bond markets are priced at an increase that does not exceed 25 basis points.

The bank will issue an update of its expectations of interest rates, inflation, unemployment and cyclical economic growth, which is issued every three months.

The last update of the bank comes back in February. It is expected that the bank will change its expectations for inflation and interest rates, especially after it confirmed in its expectations in February that interest rates will not exceed 2% until end of this year.

The retail sales that will be released tomorrow, Tuesday, in the Asian session, may have some impact on the decision of the Bank of New Zealand, as expectations indicate that the retail sales fell to 0.3% in April, compared to a growth of 8.6% in March.

The movements of the New Zealand dollar will be based on the bank’s decision, as if the interest rate is raised by 50 basis points, the New Zealand dollar will rise, and vice versa.

US Federal Reserve minutes

At the end of Wednesday’s session, attention will turn to the minutes of the Federal Reserve’s meeting two weeks ago, and focus on the tightening pace of the US Federal Reserve members, especially since the possibility of raising interest rates by 75 basis points has become almost non-existent.

With the tightening of the US Federal Reserve and the slowdown in the pace of economic growth and recession fears, investors are watching the response of the members of the US Federal Reserve and whether there is a possibility to slow the pace of tightening.

Statements of the heads of central banks BoE Governor Bailey will speak today in the US session at the Bank of England’s annual economic conference.

US Federal Reserve Chairman Jerome Powell and Central Bank President Christine Lagarde are expected to speak tomorrow, Tuesday, in the American session on the sidelines of the start of the annual Davos World Economic Forum, which will be the first time since the start of the epidemic 2020.

Turkish Central

The Turkish Central Bank meets Thursday as expectations indicate that the bank will keep interest rates unchanged at 14% despite the declines in the Turkish lira since early May.

Will PCE decline in April?

The United States of America will announce by the end of the week, Friday, the preferred indicator for measuring inflation at the Federal Reserve, which is the Personal Consumption Expenditure Index (PCE), where the index is expected to settle at 6.6% in April, while the markets expect the core index, excluding food and energy prices, to decline to 4.9% in April, compared to By 5.2% in March.

Scattered data during the week Ifo confidence level indicator in Germany will be released on Monday New Zealand Retail Sales and PMI Services and Manufacturing will be released from Australia, Eurozone, UK and USA tomorrow Tuesday.

Bank of New Zealand’s decision Wednesday, while US durable goods orders and the Fed minutes will be released in the US session.

Thursday retail sales will be released from Canada and the revised growth reading will be released from the United States of America, while Europe will be on holiday to mark Ascension Day.

Friday we will watch the PCE inflation index from the United States of America.