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Three central bank decisions, all to rise by 50 basis points?

While last week lacked in data, this week has significant data from the US; Non Farm Payrolls, and three central banks decisions, as well as an end to Chinese lockdowns, so  volatility is likely to return.

The slowdown in the inflation rate in the US has given rise to hopes that Wednesday will see only a 25bps rise however I think the Fed are determined to bring inflation under control and will continue at 50bps, but the minutes that get published later are likely to show some dissension amongst the Fed members.

The Bank of England is also likely to show resolve and raise 50bps even with the threat that this will finally tip the economy into recession which it has thus far avoided.

And not to be ignored the ECB are likely to raise 50bps again as with the UK some parts of the Euro economy are slipping into recession (i.e. Italy), but inflation is the obsession across the G7 presently so growth may well get sacrificed.

The data is predominantly employment related and likely to show the state of the US economy and thus the consumer after the near constant rate rises.

Market perception is one of a weakening US$ with the economy having a soft landing thus any data, particularly the Non farm data, that is higher than expected could cause a sharp move as it takes the market out of its comfort zone.

But we have had a month of layoff announcements so a slight tick up in unemployment is the most likely outcome.

In the commodity world palladium suffered most as a leading US bank suggested that supply of recycled auto catalysts would increase and the increasing electrification would lower demand. It was enough to cause investors to drop the metal to close to two year lows. Platinum was lower but reluctantly. Copper slid but remains elevated.

Oil continues to range with a continual eye on the Ukraine situation.

Date

Country

Figures

Expected

Previous

January 30

Germany

GDP yoy

0.8%

1.2%

January 31

Germany

CPI

9.2%

8.6%

 

USA

Consumer Confidence

109

108.3

February 01

USA

ADP Employment

170K

235K

 

USA

ISM Manufacturing

48

48.4

 

USA

FOMC rate announcement

4.63%

4.38%

February 02

GBP

BoE Rate decision

4%

3.5%

 

EUR

ECB Rate decision

3%

2.5%

 

USA

Jobless Claims

200K

186K

February 03

USA

Non farm payrolls

185K

223K

 

USA

Unemployment

3.6%

3.5%

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