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Fed week, are we ready?
Central bank week is here, and markets are looking forward to it
Markets cautious ahead of Fed meeting, expecting a 25-basis point rate hike but more importantly to signal plan for the remainder of the year
Dollar slightly recovered from 15-month lows, euro flat around 1.112 before ECB's decision.
BOJ likely to keep loose policy, copper prices decline, gold retreats, China plans stimulus, tech giants to report earnings.
Are we there yet?
Investors are treading carefully with the Fed meeting around the corner that’s widely anticipated to raise interest rates by 25 basis points on Wednesday. The central issue at hand is whether the Federal Reserve will offer indications of potential further rate hikes later in the year, given the ongoing situation of U.S. inflation persisting above the bank's targeted range.
The dollar opened the week slightly drained after recovering back from touching 15-month lows trading near 101.22.
Under the spotlight too comes the ECB, with expectations to hike interest rates by 25 basis points, while the euro stayed flat in Asian trading hours, consolidating near 1.112 ahead of the ECB’s key decision later this week.
BOJ expects inflation to drop even lower
The Bank of Japan has provided little indication of its intention to tighten its ultra-loose monetary policy in the short term. It is widely anticipated that the bank will maintain the current interest rates and yield curve control measures in its upcoming meeting on Friday.
The yen is expected to stay under pressure with the BOJ's ultra-loose policy, compared to the Fed's current stance. Meanwhile, the USD/JPY pair continued its upward trend for the 4th consecutive session, hovering near 141.80.
From the data side, The Japanese manufacturing PMI fell to 49.4 in July 2023 from 49.8 in May, marking the sixth consecutive contraction in factory activity this year. This reading is the lowest since March.
Gold retreats a little, China to roll out stimulus
Bullion prices slightly dropped below its 2-month peak over potential signals of ending the cycle. The precious metal was last seen near $1963, after facing strong resistance near the $1980 range.
Copper prices experienced significant declines in the past week due to weak economic indicators from China. The world's largest copper importer saw its recovery losing momentum, leading to bearish trends in copper markets.
In response to the slowdown, the Chinese government is anticipated to introduce additional stimulus measures to bolster economic growth. The government announced plans to open up sectors such as transport, water, and other infrastructure to private companies. Moreover, policies aimed at simplifying the investment process in the country will also be introduced.
This move could potentially lead to increased copper imports by the country.
Tech heavy champs to report earnings
On the earnings front, companies including Microsoft Corporation, Alphabet Inc, Meta Platforms Inc, Boeing Co, Amazon.com Inc, and Chevron Corp are scheduled to report qu
