Attention: US Federal Reserve, Bank of England, Bank of Japan to announce interest rates
- It was a busy week for central banks as inflation news coming out of the US last week was higher than expected.
- Prices in many markets are currently at major support/resistance levels
- Future comments from central bank leaders could spark new trends
The three major central banks will express their views on interest rate policy this week. Their decision-making is likely to be influenced by the better-than-expected U.S. inflation report that shook markets last week. First, United States Federal Reserve System, Interest rates will be decided on Wednesday, followed by the Bank of England on Thursday and the Bank of Japan on Friday.
Foreign exchange
pound dollar
The Bank of England’s desire to adopt a more dovish approach continues to be hampered by high levels of inflation. Recent updates to GDP statistics and underlying economic resilience point to the possibility of another rate hike on Thursday.
Daily Price Chart – GBPUSD Chart – Daily Price Chart
Source: IG
GBPUSD Chart – Time Price Chart
Source: IG
Economic data reports that are likely to affect the value of the British Pound currency pair (always BST):
Tuesday, September 19th
- 1:30pm: Canadian CPI Inflation Report (August). Analysts expect prices to rise 3.3% year-on-year and 0.6% month-on-month.
Wednesday, September 20th
- 7am – UK CPI (August). Analysts expect prices to rise 6.7% year-on-year and fall 0.2% month-on-month.
- 7pm – US Federal Reserve interest rate decisions. With U.S. interest rates expected to remain unchanged at 5.5%, an unexpected rate hike is likely to cause a decline in risk-on assets. Press conference at 7:30 p.m.
Thursday, September 21st
- 12pm – Bank of England interest rate decision.Interest rates are expected to rise by 25 basis points to 5.5%
Friday, September 22nd
- 4:00 a.m. – Bank of Japan interest rate decision. Interest rates are expected to remain unchanged at -0.1%.
- 9:00am – Eurozone PMI Index Report. The manufacturing index is expected to rise to 44.9 and the services index to 49.1.
- 2:45pm – US PMI Index Report. The manufacturing index is expected to rise to 48.8, while the services index is expected to fall to 49.0.
euro dollar
Last week’s decision by the ECB to raise euro zone interest rates by 25 basis points surprised some, but highlighted that reining in inflation remains a focus for central bankers. Next week is a quiet week in terms of euro-specific news, but we expect announcements from the Fed, BOE, and Bank of Japan to impact the value of the euro currency pair.
EURUSD Chart – Daily Price Chart
Source: IG
EURUSD Chart – Time Price Chart
Source: IG
Economic data reports that may affect the value of the euro currency pair:
Tuesday, September 19th
- 1:30pm – Canadian CPI Inflation Report (August). Analysts expect prices to rise 3.3% year-on-year and 0.6% month-on-month.
Wednesday, September 20th
- 7am – UK CPI (August). Analysts expect prices to rise 6.7% year-on-year and fall 0.2% month-on-month.
- 7pm – US Federal Reserve interest rate decisions. With U.S. interest rates expected to remain unchanged at 5.5%, an unexpected rate hike is likely to cause a decline in risk-on assets. Press conference at 7:30 p.m.
Thursday, September 21st
- 12pm – Bank of England interest rate decision.Interest rates are expected to rise by 25 basis points to 5.5%
Friday, September 22nd
- 4:00 a.m. – Bank of Japan interest rate decision. Interest rates are expected to remain unchanged at -0.1%.
- 9:00am – Eurozone PMI Index Report. The manufacturing index is expected to rise to 44.9 and the services index to 49.1.
- 2:45pm – US PMI Index Report. The manufacturing index is expected to rise to 48.8, while the services index is expected to fall to 49.0.
index
S&P500
The break of the uptrend line dating back to September 2022 was followed by a period of price consolidation. The Fed’s interest rate decision, scheduled to be announced on Wednesday, will provide a direction for where stock prices will go next, and in a press conference following the announcement, Jerome Powell and his team explained the decision. The reason behind it could be explained in more detail.
S&P 500 Chart – Daily Price Chart
Source: IG
S&P 500 – Hourly Price Chart
Source: IG
Economic indicators that are likely to affect the value of U.S. stocks:
Tuesday, September 19th
- 1:30pm – Canadian CPI Inflation Report (August). Analysts expect prices to rise 3.3% year-on-year and 0.6% month-on-month.
Wednesday, September 20th
- 7am – UK CPI (August). Analysts expect prices to rise 6.7% year-on-year and fall 0.2% month-on-month.
- 7pm – US Federal Reserve interest rate decisions. With U.S. interest rates expected to remain unchanged at 5.5%, an unexpected rate hike is likely to cause a decline in risk-on assets. Press conference at 7:30 p.m.
Thursday, September 21st
- 12pm – Bank of England interest rate decision.Interest rates are expected to rise by 25 basis points to 5.5%
Friday, September 22nd
- 4:00 a.m. – Bank of Japan interest rate decision. Interest rates are expected to remain unchanged at -0.1%.
- 9:00am – Eurozone PMI Index Report. The manufacturing index is expected to rise to 44.9 and the services index to 49.1.
- 2:45pm – US PMI Index Report. The manufacturing index is expected to rise to 48.8, while the services index is expected to fall to 49.0.
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