A Week in The Market: The US FOMC meeting, and inflation data from Europe and Australia (25.07–29.07) – R Blog

The most important news will be published on Wednesday, the day when the US FOMC is scheduled to have its next meeting. The opinion that the benchmark interest rate might be increased by 75 basis points has already been included in prices – this is the reason why the “greenback” is no longer strengthening.

However, there is a possibility, not too strong, just about 15%, that the Fed might announce a 100-point rate hike, which might come as a shock to financial markets. The day after, the US will report on Q2 GDP, which is expected to be rather sad, confirming a significant economic slump in the country.

Inflation data from the European Union will be released on Friday, together with Q2 GDP. Despite the rate hike last week, the EUR couldn’t form a proper correction.

A possible reason for this negative movement is political turmoil, but the EUR rate hasn’t plummeted after all. Italian Prime Minister Mario Draghi resigned and the country will have early parliamentary elections as early as September. And all this is happening in the heat of a huge crisis.

The Reserve Bank of Australia Governor is preparing market players for a rate hike, possibly doubled. However, such measures will depend on the Q2 CPI report, which is scheduled to be published on Wednesday.

Prices have already hit record-breaking levels, but it would be better to see confirmation in official reports. If inflation data rises, the RBA will act more aggressively. The Aussie has already got some support from market players, so the aggressive policy of the national Central Bank will raise bullish pressure.

The Pound Sterling will remain under pressure for as long as the United Kingdom has no Prime Minister. This week, the country is releasing July reports on the CBI Realised Sales and the BRC Shop Price Index, as well as the real estate market.

Investors are still waiting for any activity from the Bank of Japan so that the depreciating Yen can finally touch the bottom. Japan will publish important data on Friday – Consumer Price Index and Unemployment Rate. However, even if the data is negative, the Governor of the Bank of Japan, Haruhiko Kuroda, is highly unlikely to take measures to tighten the regulator’s monetary policy.

Some say that the Yen might stop plunging only if other global central banks stop raising their interest rates. However, it is clearly seen that the current situation in the global economy is forcing other regulators to raise rates, putting huge pressure on the Japanese currency.