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According to Nikkei: Toyota Motor (TM.N) has suspended operations at three plants in southern Japan, with the shutdown lasting until Friday.According to the Financial Times, the Bank of England is investigating the risks to Asian stock markets faced by major brokers.Shares of Indian IT company INFOSYS rose 3.3%.July 29th - Joe Kalish, chief macro strategist at Ned Davis Research, predicts the Federal Reserve will raise interest rates by September, making this weeks meeting crucial. With the market already pricing in a rate hike this year, Kalish asks rhetorically, "Why wait?" He believes a rate hike would solidify the Feds independence and enhance its credibility. However, he also points out that there are ample reasons to keep rates unchanged, including the latest inflation data and maintaining stable inflation expectations.On July 29th, BNP Paribas Markets 360 team expects the Federal Reserve to keep interest rates unchanged, "although the possibility of an unexpected rate hike cannot be completely ruled out." The banks baseline scenario is a rate hike in December, but "there is a significant risk that policymakers will strengthen inflation language in the FOMC statement, which would be tantamount to suggesting a September rate hike is on the agenda." Language regarding price stability will be a focus of discussion at this meeting, and the statement will reflect a willingness to act if necessary. However, even without such language in the statement, a September rate hike is not ruled out; conversely, the inclusion of such language does not guarantee a September rate hike. At the press conference, Warsh is expected to largely follow the pattern of June: a brief opening, concise answers, and very limited forward guidance. Assuming the statement is not significantly different from June, we believe the opening remarks will closely follow Warshs testimony to Congress, and his statements on inflation and labor data, the economic outlook, and his commitment to restoring price stability will also be consistent with his testimony.

Gold Price Prediction: XAU / USD will continue to fluctuate above $1,900 despite a decline in US Inflation

Daniel Rogers

Mar 15, 2023 11:43

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Gold price (XAU / USD) is not in danger despite U.S. inflation figures meeting expectations. Since Monday, the precious metal has been fluctuating continuously between $1,895 and $1,913. The release of the US Consumer Price Index (CPI) failed to produce a significant reaction in the Gold price; however, the upside bias appears to be solidified as wagers on lesser rate increases from the Federal Reserve (Fed) have increased.

 

The US Dollar Index (DXY) is protecting the critical support at 103.50, but it appears vulnerable to further losses as investors' risk appetite has dramatically increased. As market participants purchased S&P500 futures in response to higher odds of a smaller rate hike from Fed chair Jerome Powell, a likely recession in the US economy was postponed, signaling an uptick in optimism.

 

Contrary to the risk-on sentiment, demand for US Treasury bonds remained weak, causing 10-year US Treasury yields to rise above 3.68 percent.

 

The headline As anticipated, the US CPI increased by 0.4% on a monthly basis, and the annual figure decreased from 6.4% to 6.0%. In addition, the core CPI, which excludes crude and food prices, decreased to 5.5% from 5.6% previously. The Fed appears to be pleased with the persistence of a declining trend in US inflation.

 

In the future, investors will closely monitor the US Retail Sales (Feb) data. Monthly Retail Sales data is anticipated to decline by 0.3% compared to the previous release of a 3.0% increase. This indicates that the consumer spending rebound is over and the Fed is on course to achieve its inflation target of 2%.

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