Today's key event is Federal Reserve Chair Powell's semi-annual monetary policy report testimony before the Senate Banking Committee, scheduled. Typically, the advance text is released a few hours before, providing some insight into the content. However, given the upcoming U.S. presidential election, questions from senators may be politically motivated or aimed at voters, adding potential bias. Powell's responses will be closely watched.
Last Friday, Powell attended the ECB forum, stating that while prices are showing signs of disinflation, more recent data is needed to be confident that inflation will fall to 2%. He also expressed a cautious stance on rate cuts. The latest U.S. Consumer Price Index (CPI) is set to be released on the 11th, which will also be a key focus.
Today's Market Outlook
Until Powell's testimony, the market is likely to adopt a wait-and-see approach. The main economic indicator scheduled for release today is Mexico's Consumer Price Index (June), with no major economic indicators from the UK or Europe.
Regarding speaking events, the Bank of Japan will hold a "Bond Market Participants Meeting" in the afternoon. The next BOJ policy meeting is expected to announce a reduction in bond purchases, and the market will be watching to see how significant the reduction will be. In Europe, speeches and events by Panetta, the Italian Central Bank Governor, and ECB Board Member Chiappone are scheduled. In the U.S., besides Powell's testimony, Fed Vice Chair Barr and Fed Governor Bowman will speak on financial inclusion. President Biden will also deliver a speech, and there will be a U.S. 3-year bond auction worth $58 billion.
Trading Strategy
There is a possibility of sudden movements in the USD in response to Powell's testimony. However, it is expected that these movements will not lead to a sustained trend and will likely result in range-bound trading.
