Four Banks Fight Against Inflation
It will be the hottest week of September, with four central banks’ meetings, five PMI releases, and a lot to trade.
What Will the Fed Decide?
The EU inflation rate
September 19th, 12:00 GMT+3.
European inflation for August is released on Tuesday, September 19th. The forecast is 5.3%.
The situation in the energy market started improving in the summer. Oil prices grew by 13.5% in July and 1.7% in August. This may negatively impact European inflation.
On the other hand, Retail sales in Europe started falling, and according to the Composite PMI, the numbers dropped to 48.6 points.
The European currency may fall if the CPI is lower than 5.3%. Otherwise, the market will expect the ECB to continue with monetary strengthening, and the euro may rise.
Instruments to trade: EURUSD, EURAUD, EURCAD
The US Fed interest rate decision
September 20th, 21:00 GMT+3.
The main event of the week is the FOMC interest rate decision.
According to the CME Fed watch tool, 93% of market participants expect the FOMC to keep the rate at 5.5%. It all depends on verbal interventions.
According to voting member Lorie Logan, Skipping the rate hike in September may be appropriate, but this will not mean the tightening cycle is over.
If Powell hints that FOMC will continue holding the rate, the US dollar may rise. Otherwise, the dollar may continue falling.
The last time the Fed made decision about the key rate GBPUSD grew by 656 points from 1.28936 to 1.29592, because the rate was published the same as expected (+5.5%).
GBPUSD touched the support line 1.24200. The price is moving in bearish descending channel, but Stochastic lines intersected in the oversold zone, warning about the possible correction. The price may bounce and rise to 1.25900 (resistance level).
Instruments to trade: EURUSD, GBPUSD, AUDUSD
Bank of England Interest rate decision
September 21st, 14:00 GMT+3
BoE will make the decision about the interest rate on Thursday.
The market thinks the central bank will continue with monetary strengthening and will hike the rate to 5.5%.
Most of the BoE voting members are hawks. The markets, of course, are trying to play a little in favor of the pound and the Central Bank’s tighter rate policy; yields are near their maximums, government bond yields are rising again, debt servicing is becoming more expensive, and it will be increasingly difficult for the Bank of England to ignore this.
If the BoE increases the rate, the GBP will rise. Otherwise, GBP may fall.
Instruments to trade: GBPUSD, GBPAUD, GBPCHF
US Existing home sales
September 21st, 17:00 GMT+3.
The real estate statistics are published on Thursday, September 21st. Economists expect the growth in numbers. Existing home sales may increase to 4.1M.
Existing home sales is usually a lagging indicator of new home sales. The situation in new home sales is controversial. There was a spike in sales in July, but in June, the number of new homes fell drastically.
We think there can also be a drawdown in existing home sales.
In that case, the US dollar will fall.
Instruments to trade: EURUSD, USDCAD, USDJPY
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