26/07/2024
Written by: Ian Morley
Summary:
Friday didn’t bring much excitement, but the USD managed to close higher for the first time in three weeks leading up to this week’s Fed meeting. US treasury yields saw their biggest rise since October as markets come to terms with the prospect of higher interest rates persisting.
Speeches:
Market Insight:
This week’s focus is on Central Bank meetings, with the BoJ, BoE, and Fed taking the spotlight. The BoJ is expected to be active, possibly raising interest rates out of negative territory. Recent US data suggests the Fed will likely maintain its stance on interest rates, with June being the most probable month for any changes. The Dot Plot will provide insight into the Fed’s view on the economy, and any hints of hawkishness could strengthen the USD, especially after recent positive US data.
The BoE is likely to continue advocating for prolonged restrictive rates, with predictions of the first rate cut in August. The voting pattern in the meeting will indicate members’ inclinations. UK inflation figures released the day before may be more volatile than the BoE meeting, particularly the services CPI.
Additionally, preliminary PMI numbers for March from the UK, EU, and US are due on Thursday, followed by UK retail sales on Friday. Today sees the release of final CPI numbers from the eurozone.
Analysis:
Recent US inflation data suggests the Fed may have more work to do, reflected in money markets which have reduced expected rate cuts from 95bps to 75bps. This has led to USD gains, and any hint of hesitation in future rate cuts in the upcoming dot plot could further bolster the greenback.