United States – Starting tomorrow, Wednesday, July 31, three hot days will begin in global financial markets, which may affect commodity prices, especially gold, currencies, and stock markets.
The three days coincide with the launch of the marathon of disclosures by companies listed on Wall Street, about the results of the second quarter of this year, amid shocking data, especially in the technology sector.
US Federal
On Tuesday, the US Federal Reserve will hold a two-day meeting to decide on the federal funds interest rate, with the meeting decision due by 6 pm GMT on Wednesday.
While financial markets expect the Fed to keep interest rates unchanged at their current range of 5.25% – 5.5%, the press conference following the statement will be the focus of markets’ attention.
Global markets are awaiting Federal Reserve Chairman Jerome Powell’s press conference on Wednesday evening, to catch any signals about starting the monetary easing policy starting from the September meeting.
Global financial markets have suffered from increases in US interest rates over the past two years, resulting in a rise in the cost of debt and commodity imports denominated in dollars.
Since July 2023, US interest rates have stabilized at their highest level in nearly 21 years, while the last time the Federal Reserve cut interest rates was in March 2020, with the outbreak of the Corona pandemic.
Bank of Japan
Asian financial markets are uncertain about what the Bank of Japan will do on Wednesday, after years in which it has rarely touched interest rates.
The prospect of further policy tightening sent the yen to its highest level in nearly three months last week.
The currency has strengthened about 5 percent against the dollar since July 11 through the end of the session on July 28, helped in part by suspected, but unannounced, intervention by the central bank.
The Japanese yen experienced its worst decline in nearly three decades in the first half of 2024, with the exchange rate exceeding 160 yen to the dollar.
Bank of England
On Thursday, the Bank of England will announce its decision on interest rates on the pound, amid markets divided over whether it will make its first interest rate cut since the pandemic, reducing them from the current 5.25 percent.
While inflation has fallen from double digits a year ago to the central bank’s target of 2 percent, unemployment has risen, price growth in the services sector remains high, and the economy has recovered from a soft recession.
In contrast, the 10 percent minimum wage increase in April, and the new Labour government’s plan to increase it alongside wage increases, poses upside risks to prices.
“A rate cut would boost British government bonds, which were already supported by the prospect of monetary easing and hopes for political stability after Labour’s landslide election victory,” Bloomberg said.
For the pound, lowering interest rates is not helpful because it would reduce the currency’s attractiveness as part of the carry trade, according to Bloomberg.
US jobs report
On Friday, the US jobs report for July will be issued, which is the report that the Federal Reserve pays great attention to, along with the August report, which will be issued on the first Friday of next September.
These two meetings, along with the inflation reports for July and August, will be a key determinant of the Fed’s decision on interest rates at a meeting on September 17.
The Fed is looking for a slowdown in the job market and a soft rise in unemployment rates, which is the result of a slowing economy, which is what the Fed is looking for to reduce inflation in the country, and thus reduce interest rates.
Anatolia
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2024-07-30 16:17:57
