On Friday, employment figures from the United States and Canada should guide the pair.
US30 – Weekly Chart
The US30 has found a breakout level at 34,500 and could push ahead toward the all-time high at 36,971.
The forecast for inflation this week is for core inflation to remain at 4.8%, while the year-on-year inflation rate is expected to rise to 3.3% from 3%. A lower reading could see a further rally in the US stock market.
The Federal Reserve Chair Jerome Powell was hawkish in his comments last week. Powell told reporters in Washington on July 26 that he doesn’t see inflation cooling to 2% until around 2025.
“The process of getting inflation back down to 2% has a long way to go,” Powell said. After the consumer price index increased by 0.2% in June, the US central bank raised its benchmark rate between the range of 5.25% to 5.5%.
The current rate of 3% is a long way from the 9.1% peak, but Powell is still looking for a sharp move to 2%. “If we see inflation coming down credibly, sustainably, then we don’t need to be at a restrictive level anymore,” he explained. “You’d stop raising long before you got to 2%.” Another Fed official, Michelle Bowman, said more rate hikes were needed.
“We have made progress in lowering inflation over the past year, but inflation is still significantly above” the Fed’s 2% target, Bowman said.
Bowman is one of the more hawkish members of the Fed’s rate-setting committee and said the job market “continues to be tight, with job openings still far exceeding the number of available workers.”
“Given these developments, I supported raising the federal funds rate at our July meeting, and I expect that additional increases will likely be needed to lower inflation to the FOMC’s goal,” Bowman said.
