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WEEK AHEAD:SEPTEMBER 19

Short Description

All-important Fed Meeting

Video Script

Federal Reserve Interest Rate Decision

Another significant FOMC meeting to set US interest rates will take place this week. Consensus is for a 75 basis point hike while the Fed watch tool now expects a small likelihood of a 100-basis point increase. Data showed Core CPI is still trending higher and is now printing a 6.3% annual rate, which is higher than forecasts. Any softening to the hawkish tone will likely result in some short-term profit-taking on the US dollar since the dollar chart has these hawkish expectations highly priced in.

Number two:

BoE Interest Rate Decision

The Bank of England is expected to meet this week after being postponed for a week to allow for a period of mourning following the death of Queen Elizabeth the 2nd. According to the credit rating firm Fitch, a recession in the UK might start as early as the end of this year, making this week's meeting a little bit more challenging. Another rate increase is very likely happening, but the amount is still uncertain, which makes the pound open to volatility heading into the decision.

Number three:

BoJ Interest Rate Decision

Japan's central bank will meet again this week to decide on interest rates. This month, the Bank of Japan is anticipated to terminate a pandemic relief funding program as planned. This meeting should be closely watched because BOJ officials have been indicating that a central bank direct intervention to support the declining Yen is increasingly likely after USD/JPY topped 145. The comments helped the Yen slightly, which has fallen more than 20% against the dollar this year.

Number four:

Inflation in Canada

In their last meeting, the Bank of Canada increased interest rates to their highest level in 14 years while also indicating that its most aggressive tightening campaign in decades was far from over as it fights to control inflation. The Canadian policy rate is currently 3.25%, reaching a level last seen in April 2008. The markets will now want to evaluate if this tightening campaign will be successful in bringing down core inflation, which is currently trending upward.

Number five:

Holidays

Monday, the UK is observing a new bank holiday in honour of Queen Elizabeth the 2nd. Asian markets should be less volatile because Tokyo cash market sessions will be closed for the holidays on Friday 26th. Due to Friday's public holiday and Monday's bank holiday, this week's US trading sessions will be the main focus and source of volatility.

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