US data to provide more clarity on Federal Reserve policy

Volatility in tradeable markets is expected to remain quite high ahead as investors are shifting their focus toward the interest rate policy from the Federal Reserve, which is due next week. Federal Reserve (Fed) chair Jerome Powell is expected to announce a consecutive 25 basis point (bp) interest rate hike and will push rates above 5%. However, the event that will grab major attention will be the interest rate guidance from the Federal Reserve (Fed).

Considering the fact that the labor market conditions are getting softer, credit conditions from US commercial banks are getting tightened, and Producer Price Index (PPI) figures have significantly trimmed due to lower oil prices, the Federal Reserve will pause the rate hike regime after one more 25 bps rate hike.

However, the release of the US Durable Goods Orders and Gross Domestic Product (GDP) data will provide more clarity this week. March’s Durable Goods Orders data is seen expanding by 0.8% vs. a contraction of 1.0%. Later this week, Annualized (Q1) GDP is expected to contract to 2.0% vs. the former release of 2.6%. A decline in GDP numbers would fuel fears of a slowdown in the United States economy. This may also force the Federal Reserve to go for a steady stance on interest rate guidance.