Volatile Week Ahead: Fed Hike Decision and Central Bank Meetings Shape Economic Landscape

This summer week promises to be one of the hottest-volatile weeks for financial markets, with major central banks and crucial economic data releases on the horizon. The Federal Reserve's interest rate decision and rate calls from the ECB and BOJ are the focal points that will influence the state of the USD and global markets.

Fed Hike and CME Fed Forecaster:

The CME Fed Forecaster indicates a 98% probability of a 25 basis point rate hike by the Federal Reserve. Historically, a reading above 90% has always led the Fed to deliver according to expectations. So for this week, The markets already anticipate this move but is it fully priced in? The Fed tone while commenting on the economic outlook will play a major role in shaping future upcoming trends for the rest of the year. That's why a failure in topping market expectations could trigger a huge move.

ECB and BOJ Rate Decisions:

The ECB's intention to hike rates has been evident in recent comments done by officials, potentially impacting the Euro's value and global market sentiment. Meanwhile, the BOJ maintains its near-zero interest policy, without showcasing any signs of pivot, which for now leaves the JPY currency market in a range bound awaiting further clarifications.

To also expect further US economic readings, with the PCE; The FED's favorite gauge of inflation, being released shortly after the FOMC on Friday.

As investors await these crucial decisions, caution and vigilance are advised, as any deviations from previous beliefs could trigger substantial market shifts. The equity market's performance is also under scrutiny, raising questions about whether the current rally will persist or yield to a correction after ending the first half of the year scoring a double-digit gain.

Stay tuned as the week unfolds with potential opportunities and risks in the financial landscape.

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