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  • Writer's pictureSieracki Milosz

Financial Markets Brace for Central Bank Decisions and Currency Trends

As the new week begins, financial markets exhibit a sense of composure, with investors gearing up for significant central bank policy meetings on the horizon. Today, the economic calendar remains relatively quiet, devoid of any high-tier data releases. However, the stage is set for pivotal announcements from key central banks.

Key Central Bank Decisions Awaited

  • People's Bank of China (PBOC) and Federal Reserve: The focus of this week centers on the interest rate decisions from the People's Bank of China and the Federal Reserve, both scheduled for Wednesday. These decisions carry substantial implications for global markets.

  • Swiss National Bank, Bank of England, and Bank of Japan: Following these major announcements, the Swiss National Bank, Bank of England, and Bank of Japan will also reveal their respective policy stances.

Market Movements at the Opening Bell

  • US Dollar Index: After a nine-week streak of gains, the US Dollar Index shows early signs of retracement on Monday.

  • US Stock Index Futures: US stock index futures are trading with modest gains, setting a positive tone for the trading day.

  • 10-year US Treasury Bond Yield: The yield on the 10-year US Treasury bond maintains stability above the 4.3% mark.

Currency Exchange Snapshot

The table below displays the percentage change of the US Dollar (USD) against major currencies today. Notably, the USD appears weaker against select currencies.

EUR/USD Consolidation

EUR/USD, which experienced a sharp decline post-European Central Bank (ECB) policy decisions last week, remains in a consolidation phase above 1.0650 during the early European session. Germany's Bundesbank is slated to release its monthly report later today.

GBP/USD Holds Near 1.2400

Having recently closed below 1.2400 for the first time since late May, GBP/USD shows marginal signs of recovery just above that level on Monday. Upcoming releases of Consumer Price Index (CPI) data by the UK Office for National Statistics on Wednesday precede the Bank of England's policy decisions on Thursday.

AUD/USD Steady Ahead of RBA Minutes

AUD/USD maintains stability around 0.6450, following a week of choppy trading. Tomorrow, the Reserve Bank of Australia (RBA) will release the minutes of its August policy meeting, where officials decided to keep the cash rate steady at 4.1%.

NZD/USD in Positive Territory

NZD/USD trades positively above 0.5900 at the beginning of the week. The New Zealand Institute of Economic Research (NZIER) revised its economic projections today, forecasting annual CPI inflation to ease to 4.3% in the year ending March 2024, before declining to 2.4% in 2025.

USD/JPY Under Bearish Pressure

Early Monday, USD/JPY faces modest bearish pressure, retreating to the 147.50 area.

Gold's Rebound

Gold staged a decisive rebound on Friday, erasing its weekly losses. Today, XAU/USD maintains its position in positive territory near $1,930 amid a retreat in US yields.

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