The focus should be on inflation signals from the United States, Australia, and Japan in the coming days after a series of central bank meetings that included a historic interest rate hike by the Bank of Japan.
The Swedish central bank may add to the drama over who is lowering interest rates now, after Switzerland began easing policies among major central banks and public subscriptions in Europe started rolling.
The U.S. inflation reading on March 29 is of utmost importance to the markets after the Federal Reserve maintained its view of cutting interest rates this year, despite expectations of strong economic growth.The Personal Consumption Expenditures (PCE) index for February is expected to show a monthly increase of 0.4%, according to a Reuters survey. The PCE index for January rose by 0.3%, while the annual inflation increase was the lowest in three years.
The Federal Reserve has updated its inflation outlook, expecting the core PCE index, excluding food and energy, to rise annually by 2.6% by the end of the year, compared to about 2.4% in its December projections. Economic growth estimates for 2024 have also been raised. Any indication in the data that inflation is picking up could dash hopes that the Federal Reserve will soon begin easing monetary policy.
In Australia, inflation has finally begun to decline, and it is time to completely ease monetary tightening, as believed by the Reserve Bank of Australia. The Reserve Bank of Australia is likely to monitor inflation readings on Wednesday for any upside surprises.
Across Asia, any further easing of inflation in neighboring Singapore and Malaysia is unlikely to have a significant impact on policymakers, who are expected to keep monetary policy unchanged for some time. Consumer price figures in Tokyo conclude a week of data in Japan on Friday.
In England, the Bank of England hinted at easing monetary policy, meaning that other major central banks are ready to cut interest rates in June. The Swedish central bank, the oldest in the world, is expected to keep its key interest rate unchanged on March 27. However, it may announce that the first rate cut since the tightening of policy began in the spring of 2022 is imminent.
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Shady Fouad is a technical analyst at LDN Company
Shady's strategic vision in the currency markets is reinforced by more than fifteen years of trading experience, which enables him to blend economic and technical analyzes with high efficiency, and find the best investment ideas for traders.
