Will Canadian inflation figures support a stronger CBE move in July

Will Jerome Powell steal the show this week in his testimony before Congress

Swiss Franc Continues Gains After Swiss Bank Shocks Markets

Various economic data

that we will follow during the week After the markets bid farewell to an intense week in terms of economic data, represented by the meetings of four central banks led by the US Federal Reserve, traders await a new week in terms of economic data and somewhat calm compared to last week due to the absence of central banks during this week.

In a quick look at the most important events of the past week, and after a quiet opening at the beginning of the week, the US Federal Reserve decided to tighten monetary policy at its meeting on Wednesday, and raised interest rates by 75 basis points to reach 1.75%, in the strongest increase for one time since 1994.

The US Federal Reserve raised interest rates by 75 basis points. (fayezalajmi-4x.com) Meanwhile, the Swiss National Bank shocked the markets and raised interest rates for the first time in 15 years. The Swiss National Bank raised interest rates by 50 basis points (fayezalajmi-4x.com).

The Bank of England, in turn, decided to raise interest rates, as expected, by 25 basis points to reach 1.25%. The Bank of England raises interest rates by 25 basis points (fayezalajmi-4x.com).

We closed last week with the Bank of Japan, which kept its monetary policy unchanged and kept negative interest rates at 0.10% – Bank of Japan No change on monetary policy (fayezalajmi-4x.com).

The general index of the US dollar concluded its weekly trading with gains for the third week in a row, by about 0.40%, at the close at 104.62 levels, after testing the 105.76 levels, to continue trading at its highest level since December 2002.

What are we watching this week?

Attention is drawn during this week’s sessions to many economic data that will have a direct impact on currency movements, such as the minutes of the Australian Bank of its meeting two weeks ago, inflation numbers from Britain, Canada and Japan, in addition to Jerome Powell’s testimony before the Congressional Finance Committee and the numbers of industrial and service purchasing managers from Europe and the United States American.

Powell’s testimony before Congress The Federal Reserve Chairman will give his semi-annual testimony before the Senate and House Banking Committee on Wednesday and Thursday in the US session.

It is expected that Powell will be questioned about his recent interest rate hike by 75 basis points, what is his view of the July meeting, and whether the Fed’s aggressiveness and the strong movement of interest rates will raise the risks of a US economic recession.

The movements of the US dollar will be in anticipation of Powell’s speech to give signals for the coming period, especially with the absence of economic data for the US economy, and accordingly, Powell’s words will be scrutinized to take indications of his expectations for the coming period.

Watch for inflation numbers Canada Wednesday in the American session, Canadian inflation figures will be announced from Statistics Canada, where expectations indicate that inflation will rise in May to 7.3% on an annual basis, compared to 6.8% in April, in the highest reading of the indicator since 1983, the monthly indicator, in turn, is expected to rise to 1% compared to 0.6% in April.

These numbers, if they come as expectations or higher than expectations, will support the market expectations that the Central Bank of Canada will move faster than current expectations and raise interest rates, which may reach 75 basis points at the bank’s meeting on the 13th of July, especially after the US Federal Reserve, which surprised the markets and raised interest rates. by 75 basis points.

After the inflation figures to be released on Wednesday, the markets will start buying the Canadian dollar based on these expectations and will start selling Canadian stocks that suffered the biggest weekly decline last week since the pandemic.

Britain Inflation in the United Kingdom will be announced next Wednesday with the beginning of the European session, where expectations indicate that annual inflation will rise to more than 9.2% in May, compared to 9% in the April reading, to reach its highest level in forty years. The main index, excluding food and energy prices, is expected to rise to 6.5%, compared to 6.2% in April figures.

The Bank of England expects inflation to reach 10% and to peak at 11%, with expectations that the economy will shrink in the second quarter of this year, and therefore inflation figures below 10% will be negative for the pound, given that it will not force the bank to move stronger towards interest rates .

Japan All central banks around the world are struggling with inflation and tightening monetary policy by raising interest rates, with the exception of the Central Bank of Japan, which supports the process of easing monetary policy until the moment.

Will the inflation figures that will be issued on Friday in the Asian session be the decisive factor, and the bank will begin to change its course towards monetary policy.

Inflation is expected to stabilize at the highest levels of 2.1% in May on an annual basis, which is higher than the bank’s target of 2%, and accordingly any numbers higher than expectations may force the bank to change its easing policy and may end the suffering of the Japanese yen, which is trading at its lowest level in 24 years at Levels 134.50. Monday morning.

The Swiss Franc continues to rise One of the currencies that benefited strongly last week and the best performer to record gains of more than 300 points is the Swiss Franc, which is now trading at 0.9666 levels, benefiting from the Swiss National Bank’s surprise and raising interest rates by 50 basis points to reach -0.25% for the first time since 2015.