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The markets are (possibly) set to be as choppy this week as much as they were last week. The choppiness could materialise in the Forex market as two major Central Banks of the world take the spotlight. On Tuesday, the US Central Bank will be evaluating their response to the pandemic before members of the Senate panel on Covid aid. On Wednesday, the BoE will update the market as to its evaluation of the British economy and its monetary policy.

Tuesday is when it all begins

In his first outing since lasts week's FOMC, Fed Chair Jerome Powell will (virtually) head to Capitol Hill to address Washington politicians on Tuesday. The topic of discussion will centre on "lessons learned" regarding the Feds response to the global pandemic and its economic consequences.

Investors are currently trying to parse fact from fiction regarding what they hear from the Fed and what the market reports. Of particular concern are contradictions between the Fed's outlook for inflation, the Fed's massive money printing regime, and the rise and subsequent fall in commodity prices.

Last week's FOMC only served to increase interest in Powell's public appearances. Last week's FOMC was notable for the Fed's change in 2021 inflation projections, as well as expected long-term inflationary pressure. For example, the Fed's 2021 inflation projections rose from 2.4% to 3.4%, while it now expects two interest rate hikes by the end of 2023.

A brief reprieve is granted the USD until Thursday when we can expect to see May Orders for Durable Goods, GDP annualised (Q1), as well as the Bank Stress Test report from the Federal Reserve System.

It will be interesting to see if the USD's bullish turn last week will continue when the markets open this Monday. Further, I wonder if Powell will be drawn on any topic outside the stated reason for his Senate testimony. If he can be drawn to speak on topics outside the scope of the meeting, the USD bullishness could easily be boosted or damped by Powell's next outing.

 

GBP Forex traders: Clear your Wednesday schedule

Great Britain's FOMC equivalent is due this Wednesday. We will learn about any impending changes to The Bank of England's (BoE) monetary policy and discover any change in its stance regarding the factors affecting the GB economy.

It is unlikely that significant changes will be announced to BoE monetary policy on Wednesday. Nor is it likely that the BoE will take a hard stance on the country's economic outlook. The BoE could easily use the uncertainty created by the Government prolonging the country's lockdown, as well as and the evolution of the Delta Covid variant in the country to avoid making any changes to its projections. But, anything that indicates that the BoE will deviate from its existing monetary policy, or outlook in any economic sector will be carefully watched by the market.

Will the Sterling lose some shine this week?

Time to turn your attention to the GBP.

This week is a monster week for the UK, with several very important reports set to be released. The most important reports to watch out for are the Claimant Count Rate, Gfk’s Consumer Confidence, and Retail Sales. The reports are delivered all throughout the week, so it will be a laborious week for the currency.

The GBP strengthened against the EUR and the USD at the end of last week. Will we see profit-taking before the reports begin dropping?

Read the full report at fxstreet.com

UK reports this week

Week ahead - Central Bank speeches, CPI's

This week is relatively light regarding data coming out from countries. However, investors and traders will be focusing on one essential item – clarification on the Pfizer vaccine's efficacy and timeline. Anthony Fauci stated that the Pfizer vaccine has an "extraordinarily high degree of efficacy – more than 90%, close to 95%" and that the U.S. may begin offering the vaccine to priority groups at the end of December. This hope of a vaccine before year-end boosted risk on sentiment last week. But further clarification of the vaccine's timeline may solidify its move upwards, not to mention an additional step back to normalcy in the world.

Let's hope that the vaccine comes sooner rather than later, so we can focus on rebuilding the economy instead of listing deaths like a statistic. Here is your week ahead.

Coronavirus Cases continue to rise around the world.

Wednesday, 18th November – U.S. Retail Sales

As we put the U.S. election behind us, traders and investors' focus starts turning to the U.S. economy's health. Dubbed as the backbone of the economy, the United States consumer helped lift the economy pre-Coronavirus, helping support equities with higher valuations. The balance between households who were able to save their incomes due to lockdown and the households who could not keep their jobs became the critical question of whether the consumer will become the backbone of the United States recovery. However, with stimulus checks slowly drying up, alongside the Coronavirus worsening in the United States, analysts predict U.S. retail sales growth to slow around 0.5%.

Wednesday, 18th November – Speech form the Governor of the RBA, BoE, and the BoC

Australia
After beating a brutal second wave, Australia is on its way to a long and grueling recovery. Further supporting the recovery is the RBA cutting its interest rate from 0.25% to 0.1%. Analysts will be focusing on Governor Philip Lowe and his explanation on implementing lower rates and whether it will translate to lower retail rates. This contrasts with how New Zealand's implementation of lower rates in which they released a new tool to enable banks to lend at rates near the interest rates. AMP Capital Chief Economist Shane Oliver stated that he expects Governor Lowe to reiterate the Australian Economic Recovery as "bumpy and uneven" and that the bank stands ready to do more.

United Kingdom
There seems to be some relief with the Coronavirus situation in the United Kingdom, as the death toll is slowing. However, deaths were at around 170 in the previous couple of days, showing that the Coronavirus grapples with the struggling country. The Bank of England recently held interest rates at 0.1%. However, they decided to expand its target stock of asset purchases to around $1.2 Trillion U.S. Dollars. Vivek Paul, U.K Chief Investment Strategist at BlackRock Investment Institute\, stated that "For an economy with the headwinds of rising Covid rates, a national lockdown. And a still-uncertain outlook on Brexit, a strong monetary and fiscal policy response is essential."

Canada
Canada continues to rack up Coronavirus cases with no end in sight. Canada recorded around 5,500 new cases, an all-time high, with Dr. Theresa Tam, Canada's top doctor stating that Canada is on track for 10,000 daily Coronavirus cases if Canada is unable to rein-in the Coronavirus resurgence in the coming weeks. Dr. Tam states "Fires are burning in so many different areas and now is the time to get those under control." The Senior Deputy Governor of the Bank of Canada, Carolyn Wilkins, stated that the Coronavirus's economic "scars" could be permanent without a concerted effort from all Canadians. Canada is also set to release CPI figures year over year for October the day after, with a market consensus of a slight decrease in the growth of the CPI to 0.9%.

Thursday, 19th November – Australia's Employment and Unemployment Rates

As Australia slowly opens up their businesses alongside Australia and New Zealand borders, businesses in Australia slowly grapple with a decrease in foot traffic alongside compliance with certain Coronavirus restrictions. With women primarily bearing the brunt of job losses in the early part of Australia's recession, Shadow Minister for Future Work, Clare O'Neil stating that "a tsunami is coming for workers in predominantly male industries" Australia is set to see a 30,000 decline in employment, alongside an increase in the unemployment rate to 7.2% from 6.9% last month.

Friday, 20th November – PboC's Interest Rate decision

China has been reluctant to implement significant monetary policy changes this past year, even during the Coronavirus pandemic, opting for quantitative easing and stimulus instead. As China is relatively ahead of its recovery compared to other countries, it is seen as the first to likely exit its emergency programs, potentially increasing the offshore Yuan. However, if there were a perfect time to cut rates, it would be now as China would be better positioned to take advantage of lower rates, propelling China's recovery. My theory is that the PBoC surprisingly cuts rates this week ahead.

Eyes on the vaccine this week ahead. Stay safe and Trade safe.

Week ahead – United States Election!

With over 93 Million US Citizens voting early, surpassing two-thirds of all 2016 and consisting of 43% of registered voters, the United States election is finally two days away this week ahead. Many regard this as one of the most important Presidential Elections in history, possibly changing society's fabric in the United States for the foreseeable future.

Although the Presidential Election will probably get most of the attention, this week continues to be eventful with a lot of data being released. Here is your week ahead.

Dates are in NZDT.

FiveThirtyEight predicts in 20 out of 22 scenarios Biden will win the Presidency

Monday, 2nd November – US ISM Manufacturing

A key point in Trump's campaign in 2016 was his promise to bring jobs back to America. However, an amended NAFTA agreement, alongside many more amendments to foreign policy, has lost many manufacturing jobs. For example, over one in four Michigan manufacturing jobs have been lost since the NAFTA agreement amendment.

The Coronavirus has just brought more pain to the sector, with an estimated 381,000 manufacturing workers in Michigan, Ohio, Wisconsin and Pennsylvania were laid off or furloughed – with all, but one (Pennsylvania) states being in the midwestern part of the USA. These states were one of the key reasons why Donald Trump was elected in 2016.

As states slowly open up, the Coronavirus continues to run rampant, affecting workers employed in the manufacturing sector. Unlike the tech and finance sector, manufacturers can not work from home. With that said, the US's ISM is predicting to increase slightly from last month to 55.6 this week ahead, as suppose to 55.4 last month.

Tuesday, 3rd November and Wednesday, 4th November – RBA Interest Rate decision and Australian Retail Sales

Australia reached a positive milestone yesterday – zero community transmission. The country has a long road to recovery ahead of them, and the Reserve Bank of Australia acknowledges that. With dovish tones in the previous RBA minutes, analysts predict a 150 point basis cut, from 0.25% to 0.1% tomorrow. However, Insight Manager at Finder, Graham Cooke believes that further cuts will not make dramatic changes to the finances of ordinary Australians, stating that "a further 10-15 point basis cut us unlikely to have much of an impact on the economy –however, our experts seem to think that the RBA is in "every little bit helps" mode."

Furthermore, Retail Sales will also be released a day after the decision. Analysts predict a further 1.5% decline in Retail Sales as the Coronavirus continues to take a longer-term toll on employment.

Wednesday, 4th November – US Presidential Election.

The event everyone and I mean everyone, including your mother, will be watching.

There is nothing much to say about this other than to buckle in. Many polls state that Biden is likely to win. FiveThirtyEight predicts that in 20 out of 22 scenarios, Biden is stated to win. Other polls from firms such as RealClearPolitics see Biden leading over 9%.

Judging by the polls, the only way Trump can win is if he wins all of the swing states. The popular vote in NYC and California have Biden to win anyways, which means the popular vote will be absorbed within the Electoral college (tl:dr, the RealClearPolitics poll may be closer than is stated).

However, the polls showed Hillary winning in 2016. And we all know what happened then.

Friday, 5th November – Bank of England Interest Rate Decision

The UK struggling with lackluster leadership

The UK has finally imposed a stricter lockdown (however, not a full lockdown) on citizens for one month, with analysts predicting that the lockdown may be extended further to allow the UK to have their Christmas not under lockdown. The Bank of England is set to inject over 100 Million pounds buying back bonds to fight the second wave.

However, this may not be enough, with analysts at HSBC predicting that the BoE's bond-buying regimes are "running out of room," which may leave the central bank with no choice but to implement negative rates. Governor of the Bank of England, Andre Bailey, has not ruled negatives rates but has described evidence of their effectiveness as "pretty mixed" and that negative rates might be most effective when an economy is in a recovery phase for the economy to take full advantage of the negative rates. Analysts predict rates to stay at 0.1%.

Saturday, 5th November – US Non-Farm Payroll

A key indicator showing how well the US economy is recovering, Non-farm payrolls is predicted to print 700,000 new jobs, up from 661,000 the month before.

This week ahead is going to be a turbulent one. Strap yourself in, and brace for the ride.

Stay safe, Trade safe. Have a good week!

Week ahead: Central banks and GDP

A hectic week ahead as companies and countries start to position themselves to exit the pandemic in the best shape possible. Total Coronavirus Cases top 29 Million, with over 924 thousand deaths. Here is your week ahead.

Monday, 14th September – UK Parliamentary vote on Brexit

Boris Johnson has stated that he plans to change part of the terms in the Northern Ireland Protocol. Johnson agreed to keep the border open between the UK and Ireland a year ago. However, he plans to renege on this agreement bypassing UK legislation to override the clause. This has caused a stir between the EU and the UK as if the legislation is passed, would technically be violating international law. This has forced the UK's top government lawyer to quit in protest). This is on top of a possibility of a no-deal Brexit; amongst the global pandemic that has consumed every single politician's attention, a further wrench in the works may send the markets swinging this week ahead.

Tuesday, 15th, Wednesday 16th and Thursday 17th September – UK Unemployment Rate 3 months, UK CPI and Bank of England Monetary Policy decision

An Institute for Employment Studies Freedom of Information requests showed that 380,000 jobs were planned to be cut from May to July in the UK this year. In comparison, around 180,000 job cuts were planned from January to March 2009, around the financial crisis. The UK has taken a massive hit due to the Coronavirus, with cases continuing to rise even after the first lockdown. Social distancing measures have forced lower traffic to shops, forcing redundancies, which forces a vicious cycle. The Market predicts a 3.9% unemployment rate, which is identical to the rate three months ago. However, the CPI is predicted to increase by 0.3% by 1.3%, showing the potential effects of inflation on the UK economy.

The Bank of England, like many other central banks, are set to keep rates as is at 0.1%.

Wednesday, 16th September – US Retail Sales MoM

As US-China Tensions starts to ramp up before the election period, eyes on the consumer, which were regarded as the "Backbone of the economy" before the pandemic, has stayed relatively healthy due to government stimulus. With US retail sales rising three months in a row, economists predict that with stimulus checks ending soon, US consumers' total income should decrease, therefore seeing a drop in retail sales this month. Analysts expect a 0.1% decrease in retail sales to 1.1% in the next month.

Wednesday, 16th September - Fed Interest Rate Decision

As the Federal Reserve kicks into gear their higher inflation tolerance, the Market has its eyes set on any other support from the Federal Reserve to support the United States recovery. The Market predicts, like always, for the Fed to keep rates as is at 0.25%.

Wednesday, 16th September – GDP New Zealand QoQ and YoY

With New Zealand being touted as one of the most prosperous countries in trying to curb the Coronavirus, the country of 5 million is not immune to the economic damage caused by the virus. The country is set to see a GDP contraction the largest in history, with the Reserve Bank predicting a -14.3% fall in GDP growth. The Reserve bank is looking to Sweden as a template for negative rates. The currency markets pricing in a 72% possibility of the RBNZ cutting rates below 0% in February next year.

Thursday, 17th September – Japan BoJ Interest rate decision

With Yoshihide Suga being voted in by the party as the replacement of the current Prime Minister Shinzo Abe, Japan is currently enduring a turbulent period as it continues to grapple with the Coronavirus. Cases in Japan have recently been surging, as a reopening of the economy with no official lockdown has come back to bite the country. With declining GDP pre coronavirus, the Bank of Japan is set to keep interest rates as is at -0.1%. It is interesting to note that all the central banks with negative interest rates have left rates during the pandemic.

This week, with M & A kicking into gear, alongside further political action and central bank decisions, this week will undoubtedly be an extremely busy week ahead in the markets. Trade safe!

Central banks! Your week ahead

Central banks, central banks, central banks. This week ahead, central bankers from all around the world will conduct their annual Jackson hole meeting in which historically they discussed the macro-environment and, of course, monetary policy. However, due to Coronavirus restrictions, they cannot meet at Jackson Hole for the first time in 40 years. Like many meetings, they will be hosting a virtual meeting, available for the public to tune into. The main focus? “Navigating the Decade Ahead: Implications for Monetary Policy” – Or put simply, Monetary policy: Coronavirus edition. Here is your week ahead.

Wednesday, 26th August – U.S. Durable goods order

The Coronavirus continues to ravage the United States, with no visible end in sight. Currently, the United States recorded 48,163 new cases today, with 1,013 deaths. It is an awesome sight (the literal meaning of awesome, as in awe-some) as the U.S. stock market continues to rally to new highs, and billionaires see their wealth surge. The U.S. Durable Goods Order figure measures the cost of orders received by manufacturers for durable goods, including vehicles and appliances. As these are significant investments, they provide a good bearing on U.S. consumers (buying a new car when you just got laid off is unlikely). Therefore a higher than expected figure should boost U.S. equities and the U.S. dollar. The previous print was at a 7.6% increase in the cost of durable goods purchased, with consensus to see that number rise only 3.6% this month. 

Thursday, 27th August – Switzerland GDP Quarter over Quarter

With just under 40,000 confirmed cases, it is fair to say that Switzerland and many nations are continuing to grapple with the fight against the Coronavirus. However, just like with many other European countries, Switzerland is experiencing a resurgence of the virus. Switzerland recorded more than 300 new Coronavirus cases on Friday just before their quarterly update on Thursday. Analysts predict a print of -8.7% decline in GDP, from a 2.6% decline in the first quarter. 

 

Thursday 27th August – Jackson hole meeting, US GDP, Fed Jerome Powell Speech and Bank of Canada’s Governor Bailey Speech

Obviously not in Jackson hole due to the Coronavirus, Central banks from all around the world will host an online meeting discussing how monetary policy will be affected in the future from the Coronavirus pandemic. For the first time in 40 years, not only will the meeting not take place at Jackson Hole, but the conference will be available for the public to watch live. Furthermore, US GDP figures alongside both Fed Chairman Jerome Powell and Governor Macklem from Bank of Canada is set to speak. There is no doubt that this will be a stormy day in the markets.

 

Friday, 28th August -BoE  Governor Bailey speech

The United Kingdom continues to record new Coronavirus cases, logging over 1,041 new cases today. Investors and traders are wary of the possibility of negative rates in the future, with Deputy Governor Dave Ramsden stating that the BoE has “further headroom” to go with regards to monetary policy. The Bank of England currently holds interest rates at 0.1% and maintained its 745 Billion asset purchase target. They predict that the U.K. economy will not return to its pre-Covid levels until the end of 2021. 

 A big week ahead with monetary policy and forecasts from top Economists and Central bankers. Trader and Investors should be wary of the speeches ahead before placing any trades this week. 

We're starting something new this week! If you prefer to listen to the articles rather than reading them, we will slowly make them available on all platforms where podcasts are supported! For now, you can listen to the article here.

 Safe trading!  

Interest rates, Non-farm payroll - Week ahead

Coronavirus cases have passed 18 million across the globe, with deaths predicted to surpass 700k by the end of this week ahead. Markets are slowly pricing in how the Coronavirus is affecting countries' respective markets. The US Dollar is down 10% from its March highs, and the ASX is slowly edging down, booking losses three weeks in a row. This is your week ahead.

U.S Dollar Index

Tuesday, 4th August – Australian Retail Sales MoM and RBA Interest Rate Decision

The overarching story with regards to the Australian economy is the current situation in Victoria. They have seen triple-digit gains in Coronavirus cases, with cases jumping to 671 new infections today from 397 just a day before. The Premiere for the state of Victoria, Daniel Andrews, declared a state of disaster as they officially admit that they have lost full control over the virus. However, Daniel has not pushed for total lockdown yet, continuing with strict curfews and restrictions on how far and how many individuals can leave the house. This double-digit jump in infected cases comes when the states' largest city, Melbourne, has been in a stay at home order for the past three weeks. This puts immense pressure on the Premiere to impose mandatory lockdown, like what took place in New Zealand. Education Minister Dan Tehan stated that the federal government would "absolutely" support Victoria in ramping up its measures. The events occurring in Victoria may sway the Reserve Bank of Australia to cut rates even lower this week ahead. The rate currently sits at 0.25%, after a steep cut of 50 basis points from 0.75% at the peak of the Pandemic.

With retail sales jumping for the month of June by 2.4%, it is still seen whether Australia Citizens have been purchasing fewer goods as the Coronavirus ramps up. However, analysts predict a similar growth of 2.4% for the month of July.

Tuesday 4th August – New Zealand Employment / Unemployment Figures

With New Zealand returning to a relatively normal, the effects of the lockdown slowly emerge, especially on the labor market. The unemployment rate was 4.2% in the first quarter. However, many analysts believe that this number was propped up because the government heavily subsidized wages and introduced substantial assistance. Bank of New Zealand Analysts predicts a jump in the unemployment rate this week ahead to 5.9%, with ANZ economists forecasting 5.7%. However, ANZ states that these figures may understate the real weakness in the labor market, saying that "looking ahead, official data will, unfortunately, give a poor steer on the true state of the labor market for a while, due to volatility and temporary policy supports that are delaying job losses."

Wednesday, 5th August – Euro Retail Sales YoY

With the European Union passing a 750 Billion Euro fund to boost their economy, traders and investors are looking out for the continents' retail sales number to identify whether citizens are spending. Analysts at ING predict "a sharp rise.. to be expected before things start to level off." Retail sales are an excellent bearing as to how fast the economy is recovering. However, analysts predict a sharp drop by 5.1% in retail sales Year over Year, with last year's results being a drop in 0.2%.

Thursday, 6th August – Bank of England Policy report, Monetary policy summary, Interest rate Decision, BoE Governor Bailey speech

With Prime Minister Boris Johnson delaying the nationwide lockdown's de-escalation for two weeks due to Coronavirus continuing to ravage the country, he has finally hinted that de-escalation may come in the following weeks. Currently, the United Kingdom has had over 305k confirmed Coronavirus cases, with 46,200 Coronavirus deaths. There is a chance that the Bank of England brings rates below zero; however, they have been reluctant in the past due to concerns over bank profits. Chief economist at Investec, Philip Shaw, stated that interest rate markets were pricing in a 60% chance of a 25 basis point cut to -.15% by June next year. This is an event that will induce volatility within the major GBP pairs, so traders should be aware of the timing of their trades this week ahead if they wish to trade the pound.

Friday, 7th August – Non-Farm Payrolls

Deborah Brix, the physician overseeing the White House Coronavirus response, told CNN that the United States had entered a "new phase" of the Coronavirus pandemic as outbreaks start to increase in rural and urban areas. She states the Pandemic has become "Extraordinarily Widespread." This conveys that the USA is not close to steering clear of the damages the Coronavirus face. Analysts predict a net increase in jobs of 4.8 million for the month of June.

Many important events this week ahead – traders should look out for volatility in the major pairs in the market.

Trade safe!

Anish Lal, an analyst here at Blackbull Markets have some excellent pointers on the GBP/USD pair for the week ahead. You can watch it here.