Huge week for financial markets – volatility expected…
The next 5 trading days could be the most influential in defining the trajectory of many financial assets to year end. There’s economic data and central bank monetary policy decisions from across the globe.
First and foremost, Wednesday night will reveal the Federal Open Market Committee’s decision on interest rates. There’s been a lot of hype over what the central bank are going to do, from a 0.5% cut to a 0.25% cut to even leaving policy as it is. Everyone’s been speculating over what action they’ll take. As a result, the announcement could be a volatile one. In addition, Powell’s commentary on future policy will be extremely important for the US dollar and various other assets. Also from the US this week, non-farm payrolls will be key in defining what the Fed do after their forthcoming meeting. Expectations are for a slowdown in job growth from the previous month but estimates are still respectable at the 166,000 level. Wednesday sees the ADP (private payrolls) data while Friday sees the complete jobs report, released at 1330.
It’s a big week for the pound as PM Johnson continues to shape his government and offer commentary on how he plans to address the UK leaving on the 31st October. In addition, we’ll see a Bank of England monetary policy announcement mixed with a quarterly inflation report. No doubt the Bank will stay firm on interest rates but may feel the need to reassure markets with a dovish-styled message that they are keeping an eye on the prospect for a no-deal and will react accordingly if it comes to fruition. The pound currently sits at the lowest levels in 2 years against the US dollar.
Elsewhere, there’ll be a monetary policy decision from the Bank of Japan overnight on Tuesday. Additionally, Wednesday hosts the lastest growth and inflation numbers from the Eurozone. This week also sees the first major trade negotiations between China and the US in a while. A convoy of US negotiators including the Treasury Secretary are set to fly over to China today. Buckle up!
Written by Viv Savani. 8:28am, July 29th 2019
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