FX markets this week will be led by central banks

[MongiIG]

The Reserve Bank of Australia kicks things off on Tuesday. Forecast to raise interest rates by another 25 basis points to 3.6%. This would be the tenth-rate hike since May last year.

At its last meeting in February, the RBA said that inflation remains too high and that further hikes would be needed.

It will be followed later in the day by Fed Chair Jerome Powell's testimony to the US Senate where he’s likely to mirror the latest Fed report to Congress on monetary policy and economy published on Friday. The report was an opportunity to reiterate what dominates the Fed debate: Labour markets remain "extremely tight", and with workers still in short supply, inflation continues to punch "well above the FOMC objective" which means that economic growth needs to slow further.

On Wednesday, the Bank of Canada could be the first of the main central banks to keep its interest rates unchanged in months, at 4.5%. At its previous monetary policy meeting, the BOC said it now wants to keep rates on hold to assess the impact of cumulative rate increases.

Then Jerome Powell's Testimony to the House Financial Services Committee and on Friday, the BoJ interest rate decision where no change is expected as this will be Governor Kuroda's last meeting. The key short-term interest rate is expected to remain at -0.1% and 10-year bond yields around 0%.