Will Jerome Powell Lower Rate Cuts Expectations?

Source: Forex News

Today, the biggest news in the
financial market will be Jerome Powell, who will be testifying in congress. The
Fed Chair’s testimony will be the first one since the US reported excellent
jobs numbers for the month of June. In the month, the economy added more than 224k
jobs, which was higher than the 160k that investors were expecting. It was also
higher than the previous month’s 75k jobs. As a result of the positive jobs
numbers, investors will want to know whether the Fed chair still believes that
more rate cuts are necessary. Before the jobs numbers, traders had priced-in three
rate cuts for this year but this has been revised to two. Investors will also
receive the minutes of the previous meeting by the Federal Reserve.

The Bank of Canada (BOC) will
also be in the spotlight today. This is because the bank is expected to
announce its interest rates decision today. Investors expect the bank to leave
interest rates unchanged at the current level of 1.75%. They expect the bank to
guide that there might be no more rate hike or cut this year. This will be the
sixth straight monetary policy meeting that the bank has left rates unchanged
after hiking in October last year.

There will also be focus on the
UK as the sterling trades at the lowest level this year. The country will
release important economic data. The GDP is expected to have expanded by 0.3%,
which may be slightly higher than the previous decline of -0.4%. The index of
services is expected to have increased slightly by 0.1%. The industrial production
is expected to have increased on by 1.6% on a MoM basis. This is slightly
higher than the previous decline of -2.7%. The manufacturing production is
expected to have increased by a MoM rate of 2.2%, which will be higher than the
previous decline of -3.9%. The trade deficit is expected to have increased
slightly to GBP 12.55 billion from the previous GBP 12.11 billion. The non-EU
trade deficit is expected to have increased to GBP 4.70 billion from the
previous GBP 4.6 billion.

The EIA will release the crude
oil inventories data today. The numbers are expected to show that the US stocks
declined by more than 3.08 million barrels after declining by more than 1.08
million barrels previously. Late yesterday, data from API showed that the
inventories slumped by more than 3 million barrels. Meanwhile, the gasoline
inventories are expected to have declined by 1.3 million barrels from the
previous 1.583 million barrels. The weekly distillates are expected to have
risen by more than 0.739 million barrels.

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