Yesterday, the highly anticipated results of the US Federal Reserve (FOMC) meeting and Chairman Powell’s press conference were released. The decision to keep interest rates unchanged was largely in line with market consensus, and all eyes were on Chairman Powell’s tone and comments. His strong denial of the market’s growing expectation of a rate cut in March led to a surge in demand for the US dollar. However, there was a prior release of the US ADP employment report, which came in below expectations, and a decline in the labor cost index, leading to a preliminary weakening of the dollar. In the end, it appears that the US dollar index has not fully recovered from the turbulent conditions seen in January.
Today, the results of the Bank of England (BoE) Monetary Policy Committee (MPC) meeting will be announced. This so-called “Super Thursday” includes quarterly economic outlook updates and a press conference with Governor Bailey. Recent inflation data has shown some signs of easing, and there is likely to be a cautious stance on early rate cuts. Governor Bailey is known for disliking overhyped market expectations, so it is expected that he will emphasize a wait-and-see approach. However, it is unlikely that there will be any significant changes in the basic outlook that inflation has peaked. Central banks around the world are likely to remain patient in the current situation. It will be important to confirm any changes in the quarterly inflation outlook. Even if there is a sudden change in the GBP exchange rate, questions may be raised about its sustainability.
In addition to the BoE meeting, economic indicators to be released in the global markets include the final US manufacturing PMI for January, and the ISM Manufacturing Index for January. Also, the DMIP Inflation Rate Forecast for January, conducted by the Bank of England, will be published at a later time than usual after the MPC announcement.
Regarding speaking events, besides Governor Bailey’s press conference, there are no significant events scheduled for financial authorities. Notable corporate earnings reports include Apple, Meta Platforms (formerly Facebook), Amazon.com, and Merck.
The recent sharp decline in the USD is believed to be driven by renewed concerns about NYCB. Yesterday, there was a USD selling perspective, and I entered into a BTCUSD long position. I also considered buying GOLD, but it had advanced too much, so I chose BTCUSD.
Moving forward, we should continue to keep an eye on the developments related to NYCB.
