World major Central bank decisions are likely to attract attention this week, as investors try to gauge how close the Fed meeting is to cutting interest rates. The Bank of Japan is apparently abandoning negative interest rates after months of anticipation.
Important events and data for the week –
Tuesday – Bank of Japan Policy
The Bank of Japan’s meeting could be one of the most significant in years as officials decide to end eight years of negative interest rates, marking a major shift away from the bank’s massive stimulus program.
Japan’s Nikkei newspaper reported on Saturday that the BOJ is expected finish its negative interest rate policy this week after the nation’s largest companies agreed to raise wages by the largest amount in 33 years in annual wage negotiations with unions.
The BOJ has begun coordinating both inside and outside the bank because its negative interest rate policy ended on Friday, the report said.
With the end of negative interest rates nearly over, the market’s attention is shifting to any hints the BOJ may give about a rate hike.
A rate hike is likely to lead to a rise in JGB this week. yield and the Japanese yen (JPY). If a rate hike does not materialize, investors will be watching closely for some hawkish language pointing to a turning point in April, which could also boost demand for the yen.
Wednesday –Fed policy & Fed Meeting
Markets reacted strongly to the Fed meeting and any hints about the outlook for the Fed’s rate cut, the resilience of the US economy and the possibility of inflation rebounding.
Earlier this month, the chairman of the Fed, Jerome Powell, said officials “have gained more confidence that inflation is. moving sustainably” toward the Fed’s 2 percent target. half, but added that they want more evidence that inflation is slowing before it starts to slow.
All eyes will be on whether the Fed will change its rate hike outlook for 2024, as indicated in para. schedule Uncertainty surrounding this key event may dampen market activity in the coming days.
Market rates are expected to remain unchanged at 5.50%. This may have a neutral effect on the dollar, but the outlook for future exchange rates will increase the currency’s weakness.
Thursday – Bank of England Policy
The BoE is likely to give Thursday’s interest rate announcement some playing time as it expects more clarity on wage growth, which remains stronger than in the US or the eurozone.
Markets now expect the BoE to begin cutting borrowing costs by 5.25% in August – the highest since 2008 – trailing both the Fed and the European Central Bank.
Investors are awaiting possible changes in the BoE’s policy language. The bank rate “under review” and the voting will change after February’s tripartite split. And Wednesday’s inflation number could prompt a last-minute revaluation.
Swiss National Bank will release its latest policy on the same day. Market expect to hold unchanged at 1.75%, that could have a neutral impact on the dollar.
Further, on the same day, PMI Numbers of French, German, Eurozone UK and US will attract attention during the day.
Friday- US Fed Chair Powell Speaks.
The market will act strongly on Fed Chair Powell Speaks.
Further, UK Retail Sales m/m numbers are also to be focus on the same day. Economists are expecting the economy to have a contraction by 0.3% from previous expansion of 3.4%. That could have a negative impact on the pound and all eyes are on the Fed meeting hence.
Commodity Samachar
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