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Three Hawkish Central Bankers’ Speeches Amid Uncertainty

In a time of heightened economic uncertainty, can the current jittery market mood handle three hawkish speeches from central bankers in one day?

We'll find out as Federal Reserve Chair Jerome Powell, Bank of England Governor Andrew Bailey and ECB President Christine Lagarde speak this afternoon. The speech could soothe concerns that central bankers have plans to fight inflation, stoke more bearish sentiment on recession fears, or do both at the same time, depending on the context.

Key rhetoric in Q2

ECB 'determined' to stamp out inflation 'permanently'.

The Federal Reserve is focused on taming inflation.

Bank of England: Policymakers 'must take necessary action' to bring inflation back to normal levels.

Yesterday's speech by Christine Lagarde is expected to signal that the European Central Bank will act “decisively and decisively” to tame inflation and fuel expectations that its next meeting on July 21 closes with a hike in its key interest rate. The US central bank's eagle is likely to have an impact on EURUSD and EURGBP in the short to medium term.

So far this year, the EUR has weakened against the USD, reflecting the divergence between monetary policy in the US and the Eurozone. This may change in the third quarter, depending on the size of the ECB's rate hikes and the Federal Reserve's developments.

In other trading news, the US will release its annualized Q1 GDP results, which are expected at 1.5 percent level. Germany's preliminary harmonized annual CPI figure is also released today, which is expected to have risen to 8.8 percent in June from 8.7 percent previously. With inflation being the hot metric in the current economic environment, a surprise in German CPI readings could move the EUR pair.

Finally, China will release data tomorrow morning. The NBS Manufacturing PMI for June is expected to remain unchanged at 49.6, still technically in negative growth territory. The non-manufacturing PMI is expected to be at 52.5 in June, up from 47.8 in May. China's growth expectations have a big impact on crude oil prices and unexpected developments could move the energy market.

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This material does not contain, and should not be construed as, investment advice, investment recommendation, offer or solicitation of any transaction in any financial instrument. Please note that such trading analysis is not a reliable indicator of current or future performance as circumstances may change over time. Before making any investment decisions, you should seek advice from an independent financial advisor to ensure you understand the risks.