US jobless claims rise; Canada Australia surprise the market

US jobless claims rise; Canada Australia surprise the market

KUWAIT: The Reserve Bank of Australia and the Bank of Canada surprised the market by raising rates last week signaling that the next phase of global central banks tightening is underway. Investors will turn their focus this week toward meetings by the Federal Reserve, the European Central Bank (ECB) and the Bank of Japan (BoJ) for further clues on the path of global interest rates. Ahead of these meetings, The US debt ceiling has been extended, and fears about the US banking sector have subsided.

While global economic data has softened, inflation remains high which is expected to keep major central banks in a hawkish stance. The Fed is expected to ‘skip’ a rate hike in June and raise rates by 25 bps in July. Investors will be closely watching the Fed’s press conference, updated forecasts and dot plot for clues about the bank’s plans for future rate hikes. While the ECB is expected to hike by 25 bps in its meeting, the BoJ is expected to maintain its wait and see stance as wage growth in Japan remains stagnant despite GDP surprising to the upside.

FX markets remained range bound in a quiet week in terms of economic indicators. The Dollar