Markets should (perhaps) be as choppy this week as they were last week. The turmoil could materialize in the Forex market as two of the world’s major central banks take pride of place. On Tuesday, the US Central Bank will assess its response to the pandemic in front of members of the Senate panel on aid to Covid. On Wednesday, the BoE will brief the market on its assessment of the UK economy and monetary policy.

Tuesday is when it all begins

In his first outing since last week’s FOMC, Fed Chairman Jerome Powell will (virtually) travel to Capitol Hill to address Washington politicians on Tuesday. The topic of discussion will focus on “lessons learned” regarding the Fed’s response to the global pandemic and its economic consequences.

Investors are currently trying to analyze the fact of the fiction about what they hear from the Fed and what the market is reporting. Of particular concern are the contradictions between the Fed’s inflation outlook, the Fed’s massive money printing regime, and rising and then falling commodity prices.

Last week’s FOMC only served to increase interest in Powell’s public appearances. Last week’s FOMC was marked by the Fed’s shift in inflation projections for 2021, as well as expected long-term inflationary pressures. For example, the Fed’s inflation projections for 2021 have dropped from 2.4% to 3.4%, as it now expects two interest rate hikes by the end of 2023.

The USD is given a brief reprieve until Thursday, when we can expect to see May’s durable goods orders, annualized (Q1) GDP, as well as the Federal Reserve’s Bank Stress Test report .

It will be interesting to see if the bullish turn in the USD last week continues as markets open on Monday. Also, I wonder if Powell will be drawn to a subject outside of the stated reason for his testimony in the Senate. If he can be called upon to speak on matters outside the scope of the meeting, the uptrend in the US dollar could easily be boosted or mitigated by Powell’s next exit.

Clear your Wednesday schedule

The British equivalent of the FOMC is expected this Wednesday. We will learn of any impending changes in the Bank of England’s (BoE) monetary policy and find out any changes in its stance regarding factors affecting the UK economy.

Significant changes are unlikely to be announced in the BoE’s monetary policy on Wednesday. The BoE is also unlikely to take a firm stance on the country’s economic outlook. The BoE could easily use the uncertainty created by the government extending the country’s lockdown, as well as the evolution of the Delta Covid variant in the country to avoid changing its projections. But, anything that indicates the BoE will deviate from its current monetary policy, or the outlook in any economic sector will be closely watched by the market.