zForex

Z Forex Capital Market LLC is an expert retail broker firm committed to offering seamless online forex trading services. Our goal is to provide you with the resources you need to navigate and prosper in the financial markets. To cater to your different trading interests and objectives, we have carefully selected our product offering, which includes forex pairings, soft commodities, grain, metals, gold, crypto, energy, and indices.

The company is registered in Saint Vincent and the Grenadines under the number 2145 LLC 2022, and it holds an international brokerage and clearing house license from the Mwali International Services Authority (MISA) in Mohéli, Comoros. We follow strict compliance standards to protect our clients and their assets while maintaining a high level of integrity in all of our activities. We are here to help you gain confidence as a trader and provide you with the reliable and secure resources you need to succeed.

"Global Markets Respond to Lower Inflation and Speculations on Federal Reserve's Approach, while Asia-Pacific Markets React to China's GDP Miss"

The global markets experienced a boost from lower-than-expected inflation figures in the United States, alongside growing speculation of a less aggressive approach by the Federal Reserve in the future.
In Asia-Pacific, market performance on Monday was negative as investors analyzed important economic data from China. China's gross domestic product (GDP) for the second quarter grew by 6.3% compared to the previous year, falling short of the 7.3% forecast by analysts surveyed by Reuters.
The second quarter's GDP growth rate of 6.3% signifies a slower pace of expansion in comparison to the 2.2% growth recorded in the first three months of the year.
Additionally, the unemployment rate for young individuals aged 16 to 24 reached a new record of 21.3% in June.
Significantly, China, the world's second-largest economy, reported a second-quarter GDP growth of 6.3%, which was lower than economists' expectations. Furthermore, the People's Bank of China maintained its medium-term loan rates at 2.65% after providing 103 billion yuan ($14.43 billion) of one-year medium-term lending facility loans at that rate.
The upcoming week will witness a rise in earnings announcements, featuring results from Novartis, Ocado, and ASML in Europe, alongside major U.S. companies like Bank of America, Morgan Stanley, Tesla, Netflix, United Airlines, and IBM.
According to the International Monetary Fund, headline inflation appears to have reached its peak among the group of 20 nations. However, core inflation, particularly in advanced economies, remains significantly higher than the targets set by central banks.

Mixed Performance in Asia-Pacific Markets, Hong Kong Stocks Lead Losses, RBA Maintains Interest Rates, and China Evergrande Group Reports Steep Losses
The Asia-Pacific markets experienced a mixed performance, with Hong Kong stocks leading the region's losses, plummeting by 2%. This decline was primarily influenced by the real estate and technology sectors. Meanwhile, the Nikkei 225 saw a marginal increase, and the Topix rose by 0.32%. Japanese investors are preparing for significant economic data to be released later this week, including trade balance and consumer price index figures for June.
The meeting minutes reveal that the Reserve Bank of Australia (RBA) recently deliberated on whether to maintain or raise interest rates by 25 basis points during its July meeting. Ultimately, the central bank decided to keep the existing rates, citing the current monetary policy as already restrictive due to the prevailing cash rate of 4.1%. The RBA acknowledged the historically high level of mortgage interest payments in May and recognized a decline in inflation, which was expected to help mitigate the risk of medium-term inflation expectations rising. Furthermore, the RBA expressed concerns that increasing rates could lead to a more significant-than-expected slowdown in output growth, highlighting the substantial uncertainty surrounding household consumption.
China Evergrande Group, a Chinese property developer, reported substantial losses in its long-delayed results for 2021 and 2022. The company recorded a total net loss of 686.2 billion yuan ($95.68 billion) in 2021 and a 125.8 billion yuan total net loss in 202
On Wednesday, the U.K. inflation figures will be released as the Bank of England prepares for its upcoming monetary policy meeting on August 1. Following strong wage growth in the three months leading up to May, there remains a possibility of a consecutive 50 basis point hike.
Additionally, U.S. retail sales data is set to be released, and a strong performance indicated by the numbers could lead to a reassessment of whether the Federal Reserve has almost concluded its interest rate hikes.

Chinese Property Stocks Tumble on Debt Fears, Japan's Business Activity Holds Steady, Australia's Private Sector Contracts

On Monday, Chinese property stocks experienced a significant decline, with Country Garden's shares leading the way by reaching their lowest point in over eight months. This was triggered by renewed concerns about the debt situation of Chinese real estate developers. In response, China is implementing a series of measures to bolster its economy, especially ahead of a crucial Politburo meeting scheduled for this week, which will assess the country's economic performance for the first half of the year.
In the past week, the authorities made several pledges aimed at specific sectors and intended to reassure private and foreign investors about a more favorable investment environment. However, many of these measures were broad and lacked specific details.
Meanwhile, Japan's business activity showed growth for the seventh consecutive month, according to preliminary estimates by au Jibun Bank. The country's composite purchasing managers index (PMI) remained at 52.1 for July, unchanged from the previous month. However, the services PMI slightly decreased from 54 in June to 53.9, while manufacturing activity continued to contract, with the PMI declining from 49.8 to 49.4.
In Australia, private sector business activity declined for the first time since March, mainly due to a contraction in the services sector. Juno Bank's flash estimates showed a drop in the composite purchasing managers index to 48.3 from 50.1 in June. The services PMI fell below the no-change mark of 50, reaching 48, compared to 50.1 in June. On the other hand, manufacturing activity saw a milder contraction at 49.6, improving from 48.2 in June.
It's important to note that a PMI reading above 50 signifies an expansion in the sector, while a reading below 50 indicates a contraction.
Additionally, the HCOB Germany Composite PMI declined to 48.3 in July 2023 from June's 50.6, falling below the forecast of 50.3, as indicated by preliminary estimates. This suggests the first contraction in private sector activity so far this year and the most significant downturn since November. The decline was attributed to manufacturing production falling at the fastest rate since May 2020, mainly due to the rapidly declining demand for goods. Lastly, Spanish equities underperformed following an inconclusive outcome in the recent election held on Sunday, which generated uncertainty and weighed on investor sentiment.

Hong Kong Stocks Rebound on China's Pledge, European Markets Cautious Amid Economic Data and Earnings

On Tuesday, Hong Kong stocks experienced a strong rebound, with the Hang Seng index surging over 3%. This surge was triggered by China's Politburo, which pledged to promptly "adjust and optimize policies" to address issues in its struggling property sector. Additionally, Beijing's top decision-making body promised to prioritize stable employment as a strategic goal and introduced other measures to stimulate consumption and tackle debt risks. This commitment came after disappointing economic data surfaced last week, prompting renewed calls for policy support to bolster growth.
Meanwhile, European markets are expected to open cautiously on Tuesday as investors carefully evaluate economic data and corporate earnings from the region. There will be a keen focus on various economic reports, such as the German business climate and British business optimism index data. Notably, companies like LVMH, Unilever, Deutsche Borse, Randstad, and Italgas are slated to report their earnings on the same day.
Recent data indicated a slowdown in business activity in France, Germany, and the U.K. during July, adding to recessionary concerns across Europe. Additionally, investors will be keeping an eye on the Eurozone bank lending survey on Tuesday, which can offer insights into borrowing trends ahead of anticipated rate hikes by both the Federal Reserve and the European Central Bank.
The week remains busy for global investors, with a series of corporate earnings announcements and central bank meetings in focus. The European Central Bank is scheduled to meet on Thursday, where policymakers are expected to announce a 25 basis point rate hike and provide guidance on their efforts to combat inflation in the final stages.

Global Stocks Decline Ahead of Fed's Rate Decision and Inflation Trends: Earnings Season Remains in Focus

Asian stocks declined, mirroring the drop in European equity futures, as investors adjusted their positions to mitigate risks in anticipation of the Federal Reserve's upcoming rate decision.
During the second quarter, Australia's consumer price index grew by 6% year on year, showing a decrease from the 7% recorded in the first quarter. This marks the second consecutive quarter of a slowdown in the inflation rate, following the 33-year high of 7.8% observed in the fourth quarter of 2022.
The Federal Reserve is anticipated to approve its 11th interest rate increase since March 2022. Markets have fully priced in a quarter percentage point hike, which would bring the benchmark borrowing rate to a target range of 5.25%-5.5%. If implemented, this would be the highest level for the upper boundary of the federal funds rate since January 2001. Investors will closely monitor signals from the Federal Open Market Committee, seeking indications that the members are confident enough in the fight against U.S. inflation to temporarily pause further rate hikes.
Consumer confidence in the US soared to a two-year high in July, reaching a reading of 117.0, attributed to a tight labor market and decreasing inflation. Nonetheless, the economy still faces uncertainties, with the Conference Board's survey providing mixed signals.
International Monetary Fund’s (IMF) upward revision to the global growth forecasts joins the previously released downbeat data from top-tier economies, which in turn flagged concerns of a sooner end to the rate hike cycle.
The focus remains on earnings season, with results from companies such as Deutsche Bank, Stellantis, GSK, Carrefour, and luxury goods giant LVMH. In the United States, investors are digesting an earnings beat from Alphabet and a slowdown in cloud revenue growth from Microsoft, in anticipation of results from Coca-Cola, Boeing, AT&T, Meta, Chipotle, and Mattel.

ECB Raises Benchmark Deposit Rate to Record High, but Hints at Possible Peak Amid Falling Inflation in Eurozone and US

The European Central Bank (ECB) raised its benchmark deposit rate by a quarter-percentage point to 3.75 percent, reaching a record high last seen in 2001 when the euro was launched. This move was widely expected and marked the ninth consecutive rate hike by the ECB. However, the central bank hinted that this might be the peak of the interest rate increases, with inflation falling faster than anticipated in the Eurozone and the US.
The ECB had previously stated its intention to bring interest rates to "sufficiently restrictive" levels to achieve its 2 percent inflation target. However, the bank altered its language and now says it will keep interest rates at "sufficiently restrictive levels for as long as necessary."
ECB President Christine Lagarde acknowledged the change in wording, stating that future rate decisions would depend on upcoming economic data, leaving open the possibility of further rate hikes or a pause. Eurozone inflation has decreased from its peak last year, and it is expected to slow down further with the release of July data.
The ECB reiterated its warning that inflation would remain "too high for too long" and committed to a "data-dependent approach" for future rate decisions. While some measures indicate a softening in price pressures, the central bank still believes that underlying inflation remains high overall.
To reduce the interest it pays to banks, the ECB will lower the rate it pays on reserves required to be held by lenders at central banks in the region. This move aims to improve the transmission of policy rates to money markets but may reduce banks' incentive to pass on ECB rates to depositors, according to some economists.

Asia-Pacific Markets Rise Amidst China's Fourth Consecutive Month of Factory Contraction; Central Banks Adjust Policies in Response to Economic Challenges

On Monday, Asia-Pacific markets saw gains despite China's factory activity remaining in contraction territory for the fourth consecutive month in July. The official manufacturing purchasing managers index (PMI) was 49.3, slightly higher than June's figure of 49.0, according to the National Bureau of Statistics. Additionally, the PMI for non-manufacturing activity came in at 51.5, indicating a slower rate of expansion compared to June's 53.2.
In Japan, the central bank made adjustments to its yield curve control. They allowed 10-year Japanese government bond yields to fluctuate within a range of approximately plus and minus 0.5 percentage points from its 0% target. Furthermore, the bank offered to purchase 10-year JGBs at 1% through fixed-rate operations, expanding its tolerance by 50 basis points. These measures were taken to address concerns about the prolonged impact of monetary easing on financial markets and the real economy. BOJ Governor Kazuo Ueda clarified that it is not a move towards policy normalization but rather a measure to enhance the sustainability of yield curve control. The bank also kept its ultra-loose interest rate at -0.1% and raised its median inflation forecast for fiscal 2023 to 2.5%.
Today, preliminary Eurozone inflation data will be released, and it is expected to show a further decline from June's 5.5%. This may provide some relief for policymakers. The European Central Bank's Christine Lagarde indicated last week that the bank was open-minded about the possibility of raising rates in September as inflation shows signs of easing.
The Bank of England is widely anticipated to raise interest rates by at least 25 basis points during its upcoming policy meeting on Thursday. This would mark the 14th consecutive increase, driven by the persistence of high U.K. inflation, which saw a slight drop to 7.9% in June.

Asia-Pacific Markets Show Mixed Performance Amid China's Factory Contraction, Unemployment Rate Declines in Japan, and UK Housing Market Struggles in July 2023

On Tuesday, the Asia-Pacific markets exhibited mixed performance, triggered by China's factory activity entering contraction territory for the first time since April, as per the Caixin survey by S&P Global. The Purchasing Managers Index (PMI) for July registered at 49.2, falling short of economists' expectations of 50.3, as revealed by Reuters polls. This comes after yesterday's official statistics, indicating China's factory activity contracted for the fourth consecutive month, with a PMI reading of 49.3.
Meanwhile, in Japan, the seasonally adjusted unemployment rate for June decreased to 2.5%, slightly below the previous month's 2.6%, aligning with economists' predictions based on government data. Additionally, Japan's jobs to applicants ratio for June stood at 1.3, slightly lower than the Reuters forecast of 1.32.
Contrary to economists' expectations from Reuters polls, the Reserve Bank of Australia decided to maintain rates at 4.1%, instead of implementing a 25 basis points hike.
In Europe, several companies, including Euroapi, Uniper, Daimler Truck, DHL Deutsche Post, Covestro, BP, HSBC, Travis Perkins, and Diageo, are expected to release their earnings reports. Additionally, Eurozone unemployment data will be published.
In the United Kingdom, the Nationwide House Price Index for July 2023 experienced a notable decline of 3.8% compared to the previous year, accelerating from the 3.5% decrease observed in June, marking the largest fall in house prices since July 2009. This decrease in housing prices is attributed to subdued housing market activity due to stretched housing affordability for prospective homebuyers with mortgages.
Throughout the day, PMI updates will continue, encompassing figures from the Eurozone, including Germany, as well as from the UK and the US.

Central Banks' Moves and Economic Indicators: Japan's Policy Adjustment, New Zealand's Rising Unemployment, and Fitch's Rating Cut
The Bank of Japan has pushed back on speculation its recent policy adjustment marked the start of a tightening cycle.

Deputy Governor Shinichi Ichida on Wednesday reiterated the central bank’s flexible threshold for tolerance on long-term bond yields is merely a necessary modification to sustain its ultra-easy monetary policy position.
New Zealand’s unemployment rate increased to 3.6% in the second quarter, up from the 3.4% in the first quarter and higher than the 3.5% expected in a Reuters poll.
Most notably, job growth climbed 1% quarter on quarter, sharply higher than Reuters forecast of 0.5%.
Fitch Ratings cut the United States’ long-term foreign currency issuer default rating to AA+ from AAA on Tuesday, citing an erosion of governance and expected fiscal deterioration over the next three years.
In particular, the agency called out brinksmanship in Washington around debt ceiling negotiations earlier this year.

Service Sector Growth in China, Bank of England's Rate Hike Expectations, and Global Stock Market Performance

In July, China's service sector activity showed a stronger expansion, as indicated by the Caixin survey compiled by S&P Global. The service sector purchasing managers index reached 54.1, slightly up from June's 53.9. The survey report attributes this growth to a solid rise in business activity across the sector and a significant increase in overall new business, leading to six consecutive months of firms expanding their payroll numbers
In June, Australia's trade surplus declined to 11.3 billion Australian dollars ($7.4 billion) from May's AU$11.7 billion.
Private payrolls data showed that US companies added 324,000 workers last month, surpassing the consensus forecast of 190,000. In addition, investors reacted to news that the Treasury will issue $103 billion of securities next week, slightly more than forecast, and this comes shortly after Fitch Ratings' downgrade of the US.
The Bank of England (BOE) is considering a 25-basis point hike after last month's inflation rate showed some improvement, sitting at 7.9%, down from 8.7% in May. Despite the BOE's divergent stance from other central banks, high inflation levels and mixed labor and wage data may cause market apprehension about any unexpected moves similar to the half-point curve ball thrown at their previous meeting.

Central Bank Actions and Economic Outlook: Updates from Australia, China, and the UK

Australia's central bank has revised its growth outlook for 2023 to 1%, compared to the previous estimate of 1.25%. The Reserve Bank of Australia stated that economic activity in the country is expected to remain subdued due to cost-of-living pressures and rising interest rates affecting domestic demand. Despite this, the bank mentioned that inflation is improving and adjusted its inflation rate forecast to 4.25% from 4.5%. The bank anticipates a decline in inflation, reaching 3.75% by the end of 2024 and returning to the 2-3% target range by late 2025.
The People's Bank of China announced increased monetary support for the economy and assistance for banks in controlling liability costs. This decision came after discussions with executives from the property industry.
The Bank of England raised its main interest rate by 25 basis points, bringing it to a 15-year high of 5.25%, as a response to persistent inflation.
Investors are closely watching the European banking results and a significant US employment report is expected later on Friday. Preliminary data already indicated resilient demand for workers in the US, with a significant increase in productivity, offsetting labor costs. The forthcoming government employment data is projected to show the addition of 200,000 jobs in July, which, though lower than previous reports, still represents historical progress.

Insights from the Jackson Hole Economic Symposium: Navigating Uncertainty in Monetary Policy and Economic Shifts

The annual Jackson Hole Economic Symposium, held in the scenic state of Wyoming, is a magnet for economists, reporters, and investors eager to glean insights into the economic horizon. This year's gathering saw prominent central bankers emphasize the continued necessity of elevated interest rates until inflation is brought under control. The discussions, taking place at the Federal Reserve's yearly assembly in Jackson Hole, delved into the challenges posed by shifting economic landscapes.
Keynote speeches from Federal Reserve Chair Jerome Powell and European Central Bank President Christine Lagarde underscored the complexities they confront in determining whether to prolong the sequence of rate hikes that commenced the previous year. Despite their speeches, their intentions for the future remained veiled.
The symposium became a crucible for dialogues encompassing diverse concerns including productivity, innovation, the architecture of bond markets, the interconnectivity of global supply chains, and the ascent of public debt. It was acknowledged that central banks confront limitations in addressing structural transitions, exacerbating the intricacies of monetary policy formulation.
Internal debates within the Federal Reserve and the European Central Bank harmonized with the symposium's discussions, revolving around the quandary of heightening borrowing costs amidst persistent inflation and economic ambiguity. Powell and Lagarde admitted the challenges but abstained from divulging their forthcoming strategies.
Among the inner circle of Powell and Lagarde, dissenting viewpoints arose regarding the necessity of further rate hikes. While some urged cautious progression, taking into account potential repercussions, others championed a bolder approach.
The event dissected the potential effects of evolving trade patterns on the sensitivity of monetary policies and the overall economic robustness. Policymakers also scrutinized the ramifications of burgeoning budget deficits on the orderly functioning of the Treasury market.
In a gesture of humility, Lagarde accentuated the importance of acknowledging the uncertainties inherent in the current economic panorama. She stressed that embracing uncertainty is pivotal to upholding the credibility of central banks and fostering public trust.

China's Credit Trends, Central Banks, and Inflation Prospects

China has witnessed an improvement in credit demand and a reduction in deflationary pressures, suggesting positive signs for both its economy and financial markets. This development has boosted optimism in European stocks and US futures, as it hints at China's economic stability and expectations that the US can manage inflation without harming growth.
In the midst of China's economic challenges, Country Garden, the country's largest private developer, faces a series of creditor votes, attempting to avoid default by extending debt repayments to onshore creditors over three years.
Meanwhile, the yen strengthened by over 1% against the US dollar after BOJ Governor Kazuo Ueda suggested that there might be enough information by year-end to assess wage growth, a crucial factor in determining the Bank of Japan's monetary policy adjustments.
Although Europe had a slow start, the focus this week centers on monetary policy decisions. The ECB is set to announce its rates on Thursday, with expectations of a potential rate hike, driven by hawkish comments from officials and rising crude oil prices.
The Bank of England's announcement is scheduled for September 21, following the Fed. BOE chief economist Huw Pill is addressing the situation today, paving the way for British jobs data on Tuesday and GDP figures on the following day.
Regarding the Federal Reserve, officials have conveyed a clear message lately – they are not eager to raise rates this month but remain cautious about inflation. Investors are eagerly awaiting key US inflation data, including the consumer price index on Wednesday and the producer price index on Thursday.
US Treasury Secretary Janet Yellen has expressed growing confidence that the US can manage inflation without causing significant harm to the job market.

Asia's Stock Fluctuations, European Optimism, and Key Economic Events Ahead

Stocks in Asia fluctuated and Chinese shares were back in the red. Gains triggered by news on Country Garden Holdings Co. — which secured payment extension approval from its bondholders — were not enough to keep the positive sentiment going for long.
European stock markets are poised to open higher on Tuesday, extending the positive momentum from the previous session. This comes as we enter a busy week for economic data.
Taiwan Semiconductor Manufacturing Corp saw a 1.6% increase in its shares following a deal between Apple and Qualcomm. Qualcomm will supply 5G chips to Apple until at least 2026.
TSMC is a manufacturer of both Qualcomm's chips and Apple's chips, which power its devices.
Bank of Japan boss Kazuo Ueda's weekend comments that the end of stimulus is possible during 2023 is still reverberating in the local bond market, with the benchmark 10-year yield pushing to a new near-decade peak.
In the May to June period, the UK unemployment rate rose by 0.5 percentage points to 4.3%, in line with expectations.
The annual growth in employees' average total pay, including bonuses, reached 8.5%, influenced by one-off payments in June and July 2023 from the NHS and Civil Service.
Notably, annual growth in pay, excluding bonuses, remained stable at 7.8%, marking a record high. Overnight, BOE uber-hawk Catherine Mann warned it's too soon to stop raising rates.
Germany’s economic recovery is in the spotlight as well with the release of the ZEW survey, with sentiment likely weighed down by tighter monetary conditions.
The focus shifts to US inflation data, with the consumer price index figures scheduled for Wednesday and the producer price index for Thursday.
Additionally, China will release a plethora of data on Friday, encompassing house prices, industrial production, retail sales, and unemployment.

Global Markets Brace for US Inflation Data with Rising Oil Prices and Economic Indicators

Asian markets declined following a shaky performance on Wall Street as investors awaited crucial US inflation data, all while concerns grew over rising oil prices and their impact on ongoing inflationary pressures, complicating the outlook for interest rates.
In Japan, the corporate goods price index for August saw a 3.2% year-on-year increase, slightly lower than the revised figure of 3.4% in July. This index reflects the prices charged by Japanese companies when trading with each other. Moreover, corporate sentiment in Japan took a hit in September, with both large manufacturers and non-manufacturers showing diminished optimism.
Meanwhile, the UK experienced a 0.5% drop in gross domestic product in July, falling below the 0.2% contraction predicted by economists in a Reuters poll. The Office for National Statistics attributed this decline primarily to a 0.5% drop in services output. However, the economy outperformed expectations for the second quarter, with the ONS confirming 0.2% growth.
Market sentiment is shifting towards expectations of a quarter-point interest rate hike by the European Central Bank (ECB) due to ongoing concerns about high inflation in the region. Money markets now indicate a 70% probability of a rate increase, up significantly from just 20% earlier in the month. This change in outlook is driven by reports suggesting that the ECB's forthcoming economic forecasts will project inflation exceeding 3% in 2024, reinforcing the case for further tightening.
Economists are estimating a 3.6% year-over-year increase in US inflation, according to Dow Jones. This would represent an uptick from the previous month's reading of 3.2%. Additionally, the core consumer price index, which excludes food and energy costs, is expected to show a 4.3% rise in August, down slightly from the 4.7% gain observed in July.

U.S. Inflation Surges, European Central Bank Decision Awaited, and Arm's Debut on Wall Street.

Despite August's US inflation being higher than expected at 3.7% (compared to the anticipated 3.6%), most Asia-Pacific markets experienced gains. Meanwhile, European markets opened with a mixed outlook, with investors eagerly anticipating the European Central Bank's upcoming rate decision.
Shares of Arm, the British chip design company founded in 1990, will begin trading in New York on Thursday for the first time after being taken private by SoftBank in 2016. Shares of Japanese investment holding company Softbank slipped slightly on Thursday after subsidiary Arm priced its initial public offering at $51 per share.
In Australia, the unemployment rate remained stable at 3.7% in August, aligning with economist predictions. However, there is uncertainty surrounding the European Central Bank's decision, with economists split on whether it will maintain rates or opt for a 10th consecutive hike, potentially reaching 4%. Market expectations lean towards the latter, although concerns about the economic decline in the Eurozone could sway more dovish ECB members.
Demand for Japanese 20-year bonds at auction was the strongest since May 2020, soothing concerns about a potential normalizing of monetary policy by the Bank of Japan.
The U.S. August inflation data surpassed expectations, largely due to surging oil prices, with the gasoline index being the primary contributor to the monthly rise in the consumer price index (CPI).
The Federal Reserve is unlikely to adjust interest rates at its upcoming meeting on September 20, as markets have already priced in a more than 95% probability of no change. However, the November meeting, being the year's final one, might witness a rate increase if inflation remains elevated. Presently, the market anticipates a cautious stance from the Fed as it monitors inflation.

ECB Raises Interest Rate to Record 4.5% in Fight Against Inflation

The European Central Bank (ECB) has raised its main interest rate for the 10th consecutive time as it prioritizes the battle against inflation over a weakening economy. The rate has now climbed from -0.5% in June 2022 to a record 4.5%. The decision was influenced by revised macroeconomic projections for the euro area, showing higher inflation at 5.6% this year and 3.2% next year. However, the ECB adjusted its medium-term forecast slightly downward to 2.1%.
The ECB suggested that further rate hikes may not be immediate, stating that the current rates would contribute significantly to combating inflation.
This move also increased interest rates on the ECB's main refinancing operations and marginal lending facility to 4.5% and 4.75%, respectively. Economic growth projections for the euro area were lowered for 2023, 2024, and 2025.
While there was uncertainty leading up to this meeting, the majority of governors agreed with the decision. ECB President Christine Lagarde emphasized that future rate decisions would be data-dependent. Headline inflation in the euro area was 5.3% in August, with Germany facing a deteriorating economy. Euro zone business activity also declined to its lowest level since November 2020 in August.
Market focus is now on the ECB's statement language, especially the 2025 inflation forecast and the mention of rates being maintained for a "sufficiently long duration," indicating a flat path for some time to come.

ECB Hike Signals, China's Economic Surge, and Arm Holdings' Strong Debut

European markets were poised for a positive opening on Friday in response to the European Central Bank's indication that their latest interest rate hike could be their last. Simultaneously, global stocks were experiencing a rally.
Meanwhile, oil prices surged to their highest point in 10 months, driven by robust August data on Chinese retail sales and industrial production. Chinese retail sales surpassed expectations by growing 4.6% compared to the previous year, exceeding the Reuters poll forecast of 3%. Similarly, industrial production in August increased by 4.5% year-on-year, surpassing the 3.9% forecast.
Furthermore, industrial production, which also rose by 4.5% in August from the previous year, exceeded both the 3.9% forecast and the 3.7% increase reported for July. The People's Bank of China maintained the interest rate on its one-year medium-term lending facility and injected additional liquidity into the markets via a key policy loan for the 10th consecutive month, following a recent reduction in lenders' reserve requirements.
The European Central Bank raised interest rates by 25 basis points, marking its 10th consecutive rate hike and pushing its main rate to a historic high of 4%. The bank revised its inflation forecasts slightly upward for the current year and the next, projecting rates of 5.6% and 3.2%, respectively. However, it lowered its 2025 inflation forecast from 2.2% to 2.1% and also adjusted its economic growth expectations for the Eurozone downwards.
Notably, a significant development emerged as ECB Governing Council members suggested they do not anticipate further rate hikes at this time, indicating a potential period of stable rates.
In other market news, Arm Holdings Plc had a strong trading debut in New York, with a 25% jump in its stock price. Conversely, Ford Motor Co. and General Motors Co. faced challenges as workers at Detroit carmakers-initiated strikes following the expiration of contract deadlines. Additionally, traders were preparing for the triple witching options event on Friday, which had the potential to cause volume spikes and increased market volatility.

Market Volatility and Central Bank Decisions: A Weekly Overview

Asian-Pacific markets declined on Monday in anticipation of central bank decisions scheduled for the week. Meanwhile, European markets had a negative start to the week.
The troubled Chinese real estate developer Evergrande saw its shares plummet by as much as 22.6% on Monday following the detention of some staff from the group's wealth management unit by the police over the weekend.
There are reports suggesting that the Japanese investment holding company SoftBank is planning to make significant investments, potentially reaching "tens of billions," in the field of artificial intelligence.
Societe Generale SA's stock dropped by more than 7%, significantly impacting Europe's Stoxx 600 Index, as the lender's strategic plan failed to meet investor expectations.
Oil prices continued to rise for the third consecutive day, with Brent crude approaching $95 per barrel due to OPEC+ supply cuts tightening the market. Investors are closely monitoring Saudi Energy Minister Prince Abdulaziz bin Salman's address at an industry conference on Monday for insights into the global oil supply outlook.
The US Federal Reserve is set to announce its decision on Wednesday. While it is widely expected that the central bank will maintain interest rates, investors are keen to discern the Fed's stance on inflation.
In other developments this week, Australia's central bank will release the minutes of its September 5 policy meeting on Tuesday, and the Bank of Japan will conclude its monetary policy meeting on Friday. Additionally, the People's Bank of China is expected to announce its loan prime rate decisions on Friday.
Last week in Europe, the European Central Bank raised interest rates by 25 basis points, marking the 10th consecutive hike and bringing its main rate to a record high of 4%.