BTC at 18K, and Powell`s testimony - After the hawkish stances of major central banks, we have to watch the economic data this week. However, with more time passing, investors adjusting themselves and their portfolios to the new policy process while looking at stagflation will be more and more in the spotlight.
At the same time, with more speeches by the decision-making members of the central banks, we will have a better view and outlook of the situation.
1- The People Bank of China.
The week will start with the holiday in the United States, and PBoC monetary policy meeting, and an interest rate decision. Central banks in China and Japan have continued their dovish policies over the past months.
Just in May, PBoC cut the 5-year Loan rates, which helped the global markets.
However, for this week, we expect to see they will stay committed to the current rates and policies with no change, as the over-hawkish stance of some central banks limited the others for more supportive policies. This stance is supposed to hold the pressure on the Chinese Yuan.
2- US Home Sales - Tuesday & Friday
As interest rates increase and mortgage rates have already hit 5.78%, the overall expectation is to see the prices stay still high and not fall, which is a different reaction from earlier estimates and predictions. Tightening policies increases the pressure on stock markets.
Therefore, the real estate market will be one of the options that many can move to protect our capital from devaluation in other markets and against inflation. Both Existing and New Home Sales on Tuesday and Friday are expected to increase and support the dollar against bears.
3- Inflation in Canada - Wednesday
Bank of Canada has been expecting inflation to increase; that is why it raised the rates by another 50 bps for the second meeting in a row, taking its policy rate to 1.50%.
Since Gas and Oil prices have been increasing in the past month, we expect inflation in Canada to increase by 1.2% and 6.8%, respectively, on monthly and annual scales. It would have a negative effect on the Canadian Loonie.
4- PMI day - Thursday
Thursday will be purchasing managers` index day in the most developed economies. In the Eurozone, it is expected to decline; in the United Kingdom and the United States, most likely, they will be unchanged from the earlier month. However, overall numbers are lower than in previous months, confirming the global economic slowdown. These numbers will put more pressure on Oil prices.
5- Bankers` explanation
This week we will have many speeches by major central banks` policymakers. Monday, and while it is a holiday in the US, Bullard from FED will speak after Mrs. Lagarde`s speech. Tuesday, RBA Governor Lowe and BoE MPC Member Pill`s speeches will be watched. And Friday, Bullard will explain more about FED policies. However, Fed Chair Jerome Powell`s Monetary Policy Report to Congress will be watched more closely on Wednesday and Thursday.
6- Frustration in the Cryptocurrency Market
If you have been following our analysis page on our website, now you would not be shocked by this situation in the cryptocurrency market. Over the weekend, Bitcoin fell to 18,000 US dollars with the pressures it endured from the uneasy economic and geopolitical conditions. This pressure on the crypto market is not separate from the general conditions of other markets. This trend will change as overall negative sentiment in the financial markets changes.