Market Insights 080323
?Investors will be paying attention to Eurozone GDP today but the chances of a temporary relief for fibre in the face of a strengthening dollar remain relatively slim and expectations for German retail sales are actually quite similar. The EUR/USD pair tumbled to a low of 1.0546 following Fed Chair Powell's hawkish speech yesterday. Christine Lagarde, the head of the ECB, will be speaking at a WTO event in Geneva in the context of International Women’s Day while ECB Board member, Fabio Panetta, will be discoursing about financial infrastructure at an event of the Euro Cyber Resilience Board which is an ECB initiative to guard against cyber threats, among others. Other data due today include German industrial production and Eurozone employment change. The fibre is currently trading at 1.0536?
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The Bank of Canada could become the first major central bank to hit the brakes on the general tightening pattern in order to pause and reassess the situation. Governor Tiff Macklem is expected to announce that the key interest rate has been maintained 4.5% at the back of the data indicating a slowing Canadian economy.?Actually, trade balance figures are also due for this country in the course of the day.?The loonie was trading at 1.3761, driven by the USD, at the time of writing .?
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In his testimony to Senate banking committee, Fed Chair Jerome Powell said that the ultimate level of interest rates, in the context of the fight against high inflation, is likely to be higher than previously anticipated due to the strong fundamentals of the US economy. He also was prompted by Senator Elizabeth Warren to comment about the likely shedding of 2 million jobs in the course of the Fed's endeavour in tackling inflation, during a heated exchange. But Powell responded that not bringing inflation within the 2% target would hurt the whole US economy. Following this speech, the Fed-funds futures priced in a 50 bps hike for the FOMC due on March 20 to 22 and the US dollar index surged to a high of 105.86. Today, Jay Powell will be testifying before the House financial services committee. Data due today include trade balance figures, the ADP employment change, the JOLTS job openings and the Fed’s beige book will provide a snapshot of the current state of the economic situation.?The greenback was trading at 105.79 at the time of writing, over the Powell induced hawkishness.
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Happy Women’s Day!