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Monetary Policies of Australian and Canadian Central Banks, Awaited China Economic Data

Chump Profit Blog: The Week Ahead.

Hey there, Chump Profit readers! Get ready for an exciting week ahead as we dive into the world of finance. We'll be focusing on what the Australian and Canadian central banks have in store for their monetary policies. Plus, we'll keep an eye on China's economic data to see how things are going in their economy.

Let's start with the central banks. The Federal Reserve's recent decisions on interest rates have been quite unpredictable, causing some uncertainty in the market. This week, we won't have any comments from the Fed members because they're in a "blackout period" where they can't talk to the media about monetary policy. That means we'll have to rely on data to figure out if the Fed will raise rates or not. If traders believe there won't be any rate hikes, it could push the price of gold above $2000 and keep it there. Keep an eye out for the Reserve Bank of Australia's live meeting on Tuesday. They'll be discussing inflation figures, which could have a big impact on their decision.

We also have some important data coming out of China. Their purchasing managers index (PMI), trade, and inflation data will give us a better understanding of how their economy is doing. There are concerns about a slowdown, so these numbers will be closely watched by investors.

Moving on to the US, the recent drama surrounding the debt-ceiling issue has finally ended as President Biden signed the approved bill. Phew! Now the market's attention is shifting to the Friday's US jobs data, which gave off conflicting signals as to the state of the economy, wage inflation and demand for jobs.

The Federal Reserve has been pushing back against expectations for a rate hike, and the odds have dropped from 70% to around 30%. This has caused the US dollar to weaken against other currencies, except for the Turkish lira and Hungarian forint. Keep an eye on the Chinese yuan too, as it has been gaining value.

With the Federal Reserve members entering the blackout period, market sentiment may experience a pause. Their comments have been influencing market expectations, but now things might be on hold for a bit.

Let's talk about gold for a moment. The recent speculation that the Federal Reserve might not raise rates has caused gold prices to rise for four days in a row. If the debt-ceiling talks worsen, gold could see even bigger gains. Technically speaking, gold has found support around $1935 and the 100-day exponential moving average. If it breaks through $2000, that could be a game-changer for traders.

Now let's move on to the Reserve Bank of Australia (RBA). They'll be announcing their cash rate decision on Tuesday. Initially, it seemed like they were going to keep rates the same, but recent inflation data showed higher-than-desired rates. This might push them to hike rates instead. However, the market is currently predicting only a 22% chance of a rate hike. We'll have to wait and see what the RBA decides.

The Bank of Canada (BoC) is also in the spotlight. They've been holding off on rate hikes since March, but there's a possibility they might change their stance. The Canadian economy has been doing well, with strong GDP growth and signs of a heating labour market. However, inflation measures have been declining, so the BoC might wait a bit longer before hiking rates. The market expects them to stay on hold until at least September.

Keep an eye on OPEC+ too. They'll be meeting on Sunday to discuss whether they should cut oil production even further. This could have an impact on the Canadian dollar, as Canada is sensitive to oil prices. It's a delicate balancing act for OPEC+ because cutting production could give Russia an advantage and send a negative message about oil prices.

Lastly, let's talk about the Japanese yen. It has been benefiting from the recent weakness in the US dollar. Japan will be releasing some data this week, including household spending and cash earnings. Positive results could support the yen's recovery. In Europe, we'll be keeping an eye on Germany's industrial orders and output numbers. These figures are important because Germany is facing a manufacturing-led technical recession.

That's it for the week ahead, Chump Profit readers! Stay tuned for all the updates on central bank decisions, economic data, and more. Happy trading !

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