Decision Of The Bank Of Canada Ahead, Powell’s Comments Sent The Rate Hike Expectations Significantly Up
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Investors got a double shot of hawkishness from Federal Reserve (Fed) Chair Jerome Powell’s semi-annual testimony before the US Senate yesterday.
Powell
Powell’s comments sent the rate hike expectations significantly up and wreaked havoc across the US treasury and equity markets and the US dollar.
Data
Moving forward, the next few data points will be VERY important in cementing the expectation of a 50bp hike at the March 21-22 FOMC meeting.
Today, the ADP report and job openings data. JOLTS data would better soften this month, after last month’s booming figure of 11 mio.
On Friday, February jobs report will be released. We’d better see an easing here as well after last month’s blowout half-a-million NFP read.
Finally, the latest CPI update is due next Tuesday. And again, it’d better head sufficiently lower after last month’s disinflation disillusion.
Fed
If the fresh data doesn’t go where the Fed wants to see them, bigger rate hikes will be on the menu, and hope of soft-landing and easy disinflation could fade away.
USD
And with all the hawks in the air, the US dollar went straight up yesterday and there is no reason to bet on a softer US dollar for the next couple of days. The dollar will likely consolidate and extend gains against most majors.
Bank of Canada
Bank of Canada (BoC) is expected to keep the rates unchanged at today’s monetary policy meeting.
Watch the full episode to find out more!
- 0:00 Intro
- 0:35 Powell the Hawk
- 4:07 Data Watch
- 5:48 FX update: USD up, EUR, AUD down
- 8:31 BoC to do nothing
Ipek Ozkardeskaya
Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020.
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