Dear Clients,
Below is this week’s market forecast from our trade desk here at LTI.
This week consists of some very highly anticipated fundamental releases across markets. In view for today is the ‘Fed Chair Powell testimonial about their semi-annual monetary policy report’. We anticipate further hawkish rhetoric as stated over the last couple of weeks. We’ve also said following strong US data surprises and hawkish Fedspeak were to drive markets to reassess the Fed’s terminal rate higher and ultimately push back its pricing of cuts. We also stated that the USD could remain supported in the near term as investors readjust positions and de-risk exposure. But a more sustainable rally would require markets to be confident that the Fed could hike meaningfully above 5%. And at current, we believe this is as likely by assessing the February FOMC minutes, as there were additional statements suggesting easing financial conditions could motivate a higher terminal rate.
Today, Powell will need to convince the market that a higher for longer rate forecast is sustainable even through tightening financial conditions. We also heavily anticipate Friday’s Non-Farm Employment Change. As the labour market in the US currently shows no pressure on the Fed, and their terminal rate.
Some additional high impact releases in view for this week include:
- (CAD) BOC Rate Statement – Wed
- (JPY) Monetary Policy Statement – Fri
We wish you all a great week in and out of the markets.