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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.

Yeah the FOMC kept rates as is…But have you seen GameStop?

While the world continues to grapple with the Coronavirus, the financial markets are captivated by the financial phenomena that are GameStop. Currently, the stock price sits at $255, but by the time this is posted, the price will likely be plus or minus $50. Lawsuits have been served to Robinhood in New York and Chicago due to the low-cost brokerage withholding the ability to purchase more stocks of GME. Sources have stated that Robinhood is currently drawing millions from credit lines from Goldman Sachs and JP Morgan Chase.

"What is GameStops's Price now?" - Yes.

It is incredible how captivated the financial community and even main street on what is currently happening with GameStop. Yesterday, we had the titans on the equity markets releasing earnings. Apple, and Tesla. We also had the FOMC releasing their interest rate decision, alongside Federal Reserve Chairman Jerome Powell releasing his views on the economy, but everyone was too focused on GameStop.

What you missed - Federal Reserve Keeps Rates Unchanged

The Federal Reserve keeps rates unchanged as Jerome Powell believes that "its going to be a struggle "the pandemic still provides considerable downside risks." The Federal Reserve continues to show its unwavering support for the US, introducing a new bond purchase program worth $120 Billion a month and will continue to do so every month until 2% inflation is reached and lower unemployment is reached.

Apple breaks the $100B per Quarter mark

Apple released their highest revenue figure in the company's history, reporting $111.4 Billion, in which $65.6 billion came from iPhone sales. This was higher than the $59.8 billion analysts expected. Dan Ives praised Apple, stating that "this [was] a masterpiece quarter" for Apple.

Tesla was a mixed bag

Tesla missed earnings for the first time in 10 months. However, it wasn't all bad news, as their quarterly sales were better than expected. They have over 10 Billion in cash through the issuance of Tesla stock. Shares weakened slightly; however they rebounded today.

Be ready for more GameStop in your news feed. However, do not forget about the technical and fundamentals regarding specific currency pairs you are following.

(GME's price at closing was at 190. After hours? $350.)

UK CPI, Japan GDP - Week ahead

There will be a week ahead post where the data being released will revolve around how well the economy chugging along, and analysts will argue whether a country has reached its peak or whether the NASDAQ is undervalued at 40 times earnings. However, this week isn't that week. Coronavirus continues to be the primary context around headlines, showing that we are still in the pandemic's neck. I have a feeling that it will be like this until real progress regarding a vaccine is achieved. Here is your week ahead.

Sunday, August 16th – GDP of Japan, Quarter over Quarter

Japan continues to post significant Coronavirus figures, with over 1,200 Saturday, topping 1,000 for the third straight day with cluster outbreaks as summer holidays begin. Initially praised for their laissez-faire regarding their quarantine strategy, i.e., has come back to bite them. However, unlike New Zealand, where they essentially forced everyone back into their homes at the slight hint of a potential outbreak, Japan continues to allow its residents outside. For example, they placed restrictions on the maximum number of spectators, concerts, professional sports, and other events – to 5,000. This has made analysts wary of Japan, considering they had low GDP growth before the Coronavirus pandemic. Analysts predict a contraction of 7.3% last quarter, at an annualized pace of 26%. A 7.3% contraction this week ahead would mark the largest GDP decline post-world war.

Tuesday, August 18th – RBA Meeting minutes, report

Like Japan, Australia was praised for its laissez-faire approach resulting in early positive results in Coronavirus cases. However, also similar to Japan, that approach has come back to bite them. Most notably in the state of Victoria, in which the Coronavirus has run rampant. Although the rate of daily increase in cases has slowed down due to the Premiere of Victoria, forcing a mandatory quarantine to all citizens, they are still recording triple-digit cases regularly. They recorded 279 new cases today, with 16 deaths. However, this is an improvement from 2 weeks ago, when they were recording jumps from 200 to 700 new cases in a day. Australia's RBA before the "second wave," took a confident approach that Australia would be capable of pulling out of the pandemic similar to New Zealand with a lower economic cost, and their monetary policy showed that. However, due to the second wave, the report being released will likely be extremely dovish and hint and further rate cuts in the future.

Wednesday, August 19th – UK CPI figures

The UK has seen its Coronavirus curve slowly rise, and that has made government officials anxious. They have recorded over 1,077 new Coronavirus cases in the pasty day, which is slightly under their 1,097 seven-day moving average. However, analysts predict CPI a small change from a 0.6% increase in the CPI to a 0.7% increase this week ahead. If the increase is larger than expected, we should see the GBP strengthen against its peers.

Wednesday, August 19th – Canada CPI Year over Year

Canada was one of the only nations to not impose a strict lockdown for its citizens and come out flattening the curve. Yesterday, Canada confirmed 237 new cases. While not entirely eliminated, the country has not experienced breakouts similar to that of Japan and Australia. Previously, the CPI was up 0.7% compared to a year ago, with analysts predicting a CPI increase of 0.2% this week ahead. With such wild variations, it is yet to be seen what the CPI is going to be. However, a rise in CPI signals a bullish stance in the Canadian dollar, with a hawkish central bank.

Thursday, August 20th – USA FOMC Minutes

The United States is not close to flattening the curve.

A staggering number: 5,565,114 Coronavirus cases, 173,080 deaths – a 6% mortality rate. The United States has not been able to flatten the curve. With an election coming up, President Donald Trump has tried to re-open the economy to boost his chances come election time. However, this has not worked. His selflessness has cost many people their lives. Usually, a market-moving event, TD Securities analysts noted that "at the July FOMC meeting, the Committee did not imitate any new policy actions, and that changes to the statement were minor." Combining this with August being a month were a lot of traders and managers take leave for their summer holidays, we should expect this to be relatively non-market moving.

As stated above, this month tends to be quite slow due to many traders, investors, and asset managers taking leave for the summer holidays. Therefore, the market should be relatively muted at this time. This may be an excellent opportunity for traders and investors to backtest their strategy or even paper trade to practice for the coming months. Many elections are coming, such as the United States and New Zealand general elections, which will cause significant market moves.

Trade safe! Have a good week ahead.