Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
USD, GBP, JPY: the week of interest rates and monetary reports!
Information is not investment advice
What will move the market this week?
This week may fairly be called a week of monetary policy reports. On Wednesday, Thursday, and Friday, we will have the US Fed, Bank of England, and Bank of Japan provide their interest rates and monetary policy reports respectively. Therefore, it makes sense to expect possible movements in the USD pairs as well as those with the GBP and JPY on the corresponding days.
After bouncing downwards from below the tactical resistance of 1.20, this pair trades under 50-MA. While the mid-term outlook speaks in favor of the USD, local bearish action is a very likely scenario – especially if the US Fed comes with an upbeat domestic economic outlook. The support of 1.1830 may be the target to watch in this case.
Gold bounced off the resistance of 1740. Although it trades above the 50-MA, the lower highs formed in the last two weeks in combination with the failure to break the mentioned resistance suggest that bears may drag it down. 1680 is the local support to look at.
This pair trades at 8-month highs. The resistance of 109.50 left by the June performance is one step away and may be passed if the US Fed’s report supports the USD. On the other hand, hawkish tones from the BOJ may reverse the movement and send USD/JPY back downwards.
After reaching 1.42, GBP/USD fell to 1.39 where it trades currently. However, that’s still within the larger uptrend. Therefore, bulls may get back to lift the pair to the local highs of 1.40.
On Thursday, the 2nd of February, the Bank of England will publish its report concerning interest rates and inflation data for the Eurozone. Professionals and investors anticipate that Andrew Bailey’s lead team of policy makers will likely raise interest rates to 4%; the highest in over a decade, for the tenth time in a row.
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.
Western countries are trying to find other options for oil and gas supplies after a 10th package of sanctions, which will put more pressure on Russian oil and decrease global oil supply. Italy, for example, is in talks with Libya.