Central banks’ meetings, their decisions on monetary policy, and stock market reactions will be interesting.
EUR: the rate is unlikely to change
The European Central Bank will meet to consider options for interest rate decisions. The figure is highly likely to remain unchanged at 4.5% per annum. The ECB’s comments on inflation and further actions are critical to the market. If the regulator demonstrates a conservative stance, the EUR exchange rate may come under pressure.
USD: monitoring the GDP
The US is gearing up to release the first GDP estimate for Q4 2023. The economy is expected to have grown by merely 2.0%, while the indicator increased by 4.9% in the previous quarter. The report components are essential: market participants are looking for confirmations of the future easing of the Federal Reserve’s monetary policy and will therefore pay attention to the details. The USD currently maintains a strong position.
JPY: focus on the CB’s comments
The yen has halted its decline against the US dollar. The Bank of Japan will likely leave the interest rate in negative territory at its meeting. The regulator’s comments will be of more importance to the market. If the central bank officials’ tone is not confident, the JPY will rapidly return to the weakening.
AUD: looking to China
The AUD, paired with the US dollar, has stabilised as China signalled positive economic changes. This week, there will be insufficient Australian statistics to determine the Aussie’s exchange rate trajectory. External signals will, therefore, have more priority. The AUD may continue to recover.
CAD: and the rate again
At its meeting, the Bank of Canada will likely keep the interest rate unchanged at 5.0% per annum. How the regulator characterises the labour market and pricing situation is important. The CAD exchange rate has a chance to strengthen slightly.