The general index of the US dollar is trading on the rise for the second consecutive session with the beginning of the European session today, Wednesday, the second of February, taking advantage of its position as one of the most important safe assets in the markets, to trade at its highest level since July 2020 at levels of 97.65, amid anticipation in the markets for the testimony of Jerome Powell before Congress in the session Today in the US, in addition to many separate data that will be released today.
Geopolitical tensions and the war between Ukraine and Russia have become the main driver of the markets during this period, as any rise in the severity of fears will raise the currencies and assets of safe havens, which are led by the US dollar, and vice versa in the event of an increase in risk appetite, while the markets ignore economic data with the exception of inflation data and central bank meetings.
Today, Wednesday, the testimony of US Federal Reserve Chairman Jerome Powell in front of a committee of congressional legislators to discuss developments in the current conditions and their impact on the American economy, and gives an update to the monetary policy of the bank, which reflects the importance of the testimony and its impact on market movements.
The Russian-Ukrainian turmoil will make the matter more complicated for monetary policy makers in the Federal Reserve, as this conflict has raised the prices of commodities and oil to record levels, which threatens to raise inflation prices to new levels.
It is expected that Powell’s focus will be on how to counter the effects of this conflict in the coming period and reassure the markets and investors that the Fed is working to combat high inflation while balancing the risks posed by the Russian invasion.
Estimates of futures contracts, according to the CME Fed Watch tool, indicate that the Fed will raise interest rates by a quarter of a blister at the March meeting by 98%, after expectations were indicating more than 50% to raise by half a point before the Ukraine crisis.
With the exception of Jerome Powell’s testimony, the ADP private sector jobs report and Fed Bullard’s statements are expected to be announced before the US markets open.
Bank of Canada
meeting The Bank of Canada is expected to announce its monetary policy in the US session on Wednesday, as it is estimated that the Bank of Canada will raise interest rates for the first time this year by 25 basis points to reach 0.50%.
Before the Russian-Ukrainian conflict, the markets had a chance of more than 70% that the bank would raise interest rates by about 50 basis points, but after the war with Ukraine and with the heightened uncertainty in the markets, this opportunity fell to less than 20%.
The movements of the Canadian dollar will be based on the bank’s speech and the interest statement, especially since the current prices were calculated by a large percentage, raising the interest rate by a quarter of a point.
05/11/2024
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