Federal Reserve at the most critical time to make a decision
The news about the financial crisis is increasing day by day and makes the risk aversion in the market more than past.
Recession increases, the bankruptcy of banks, and consequently the outflow of money to safe markets like gold.
Although, according to the events of last week, traders predict that the Federal Reserve will not increase the interest rate and we show higher highs in gold prices. but we predict that the FED raises interest rates and tries to keep the dollar strong in order to reduce stress in the market and to continue to show their fighting against inflation and their complete control over the market. This decision happened on this week Wednesday.
Refer to history
As we all remember, in late 2008, the Federal Reserve began massive asset purchases, including Treasuries and mortgage-backed securities, or MBS, to prevent a complete collapse of the financial system. For six years, the central bank continued its asset-buying program, known as quantitative easing, or QE, that kept interest rates low in hopes that increased bank lending would boost growth.
So we are talking about possibilities, although there is a possibility that it will be forced to stop its contractionary cycle due to its banking crises. As a result, one of the best strategies is to stay away from risky trades and wait until Wednesday to see what the important decisions will be this week.
Bank of England, Switzerland
British news in the past months has been all about crises and recession in the UK, but in the past weeks, there has been positive news about the UK’s economic growth. Still, the increase in electricity prices and the lack of labor have not given traders hope for this currency
Negative real wage growth in the UK, inflation is around 10% (CPI (YoY) (Jan) 10.1%, prev: 10.5%) and employment changes are less than last month (Employment Change 3M/3M (MoM) (Jan) 65K, prev: 74K) are data that put pressure on the British pound.
UK interest rate hike
As economic data results have been stronger recently, interest rate hikes are more likely, but there are no guarantees. Inflation data (CPI) will be published on Wednesday and retail sales data will be published on Friday, so any drastic change (better than expect) in these two prints can impact the Thursday decision (0.5 interest rate hike) of the BOE.
Forex Interventions of the Swiss Central Bank
The Swiss central bank is likely to raise interest rates by 0.25 percent on Thursday. An increase that is roughly priced. Therefore, changes in the franc will require better-than-expected data and positive news about Swiss banks.
In the last quarter, the Swiss central bank has been buying CHF in the forex market to help increase the value of the currency. This purchase together with the increase in interest rate makes this currency the best safe currency and this week it can be the center of attention as a safe haven.
On Monday we will have China’s Loan prime rate as well as the European Central Bank’s speech.
On Tuesday, the Australian central bank’s meeting, Canadian inflation “CORE CPI (MOM) (FEB)” and GERMAN ZEW ECONOMIC SENTIMENT (MAR)
Wednesday is a volatile day. The FOMC conference and the Federal Reserve’s interest rate decision will strongly impact the market.
On Thursday, we will have the decisions of the Swiss Central Bank, the decisions of the Bank of England, as well as the US unemployment claim data
And on the last day of the market, we have the core retail sale of CAD and GBP PMI data.