We are in the second trading week of the new month, in which we bring you a summary of the most interesting economic events that caught our attention during last week's trading.
Last week, we saw increased volatility in the markets again, especially in the currency pairs with the British Pound (GBP). Australia and the US also brought us interesting economic news.
AUD
On Tuesday (2.11.2021) we saw the interest rate announcement coming from Australia.
We did not see any change again and rates remained at 0.10 %. The statement from the Governor of the RBA - Reserve Bank of Australia, Philip Lowe, shows that the RBA will continue to maintain the cash rate target at 10 basis points. The Board also decided to continue to purchase $4 billion of government securities per week until at least mid-February 2022.
The economy in Australia is recovering after its interruption. The Delta epidemic caused a sharp drop in hours worked, but it is already making a comeback.
Financial conditions remain very accommodating and interest rates are at record lending lows.
This information is slightly encouraging.
USD
On Wednesday (3.11.2021), the US Federal Open Market Committee (FOMC) press conference caught our attention, with the Fed committing to use a range of its tools to support the economy in these challenging times. Economic activity and employment continue to strengthen thanks to advances in vaccinations. However, the path of the economy continues to depend on the progress of the virus... How else...
The Committee decided to maintain the target range for the federal funds rate at 0 to 0.25 %. They wanted to maintain this target until labor market conditions reached an appropriate level. The Fed stuck with the "transitory" language that some thought would be removed, but added some humility to the language and said it was "expected" to be transitory.
GBP
The British Pound (GBP) had a particularly bad week, weakening on virtually all of its currency pairs. One reason for the weakness was unfulfilled expectations that the Bank of England (BOE) would raise the bank rate by 15 basis points. This did not happen and the BOE left its rates unchanged. BOE Governor, Andrew Bailey commented that it was not their responsibility to guide the markets with interest rates... To some extent he was not surprised to see a correction in the markets.
What's in store for the current trading week?
We expect a slightly quieter week this week. On Tuesday, we will hear from ECB President Christine Lagarde and BOE Governor Bailey. From the US, we will have short-term energy outlook data and Fed Chairman Powell will speak. On Wednesday, we expect more data from the US on the CPI change and unemployment. On Thursday, GDP from the UK is sure to catch our attention.
Sources:
A new trading week is here and we bring you a regular summary of the key trading events of the past week.
The markets experienced more volatility again this week. This is because of the upcoming economic data from the Eurozone, the US and Canada.
CAD
The first thing we saw on Wednesday was the Canadian dollar's reaction to the Bank of Canada's (BOC) rate decision for October 2021. The CAD strengthened strongly on news that the Bank of Canada was prematurely ending its quantitative easing (QE) program and limiting its purchases to $0 per month. Indeed, it was widely expected to shrink to USD1bn/week from USD2bn/week. The Bank is ending quantitative easing (QE) and moving into a reinvestment phase during which it will purchase Canadian government bonds for the sole purpose of replacing maturing bonds.
JPY
The Japanese yen (JPY) fared slightly worse. Thursday morning saw the announcement of interest rate changes in Japan, with the Bank of Japan leaving its key plans unchanged, as was also expected. Bank of Japan Governor Haruhiko Kuroda said in his press conference that he would ease monetary policy further if needed, without hesitation. The BOJ's quarterly report shows that, Japan's economy is likely to recover once the impact of the pandemic wears off. However, the economy continues to remain in serious condition but is trending higher.
EUR
On the same day, it also raised the ECB interest rate decision, which it left unchanged as expected. However, of far greater importance for the euro was the press conference where Christine Lagarde mentioned that the economy would jump above pre-pandemic levels by the end of the year. THAT resulted in a slight strengthening of the Euro.
What's in store for the current trading week?
The current trading week will again bring data from central banks, which will issue their decisions on interest rate changes. Tuesday will bring us this data from Australia and Wednesday from the US. Therefore, we expect increased market volatility again on these days.
Sources:
In the photo: Governor of the Bank of Japan, Haruhiko Kuroda
Photo source: https://www.forexlive.com/
It's a new trading week and we bring you an overview of current economic events in the world that have influenced our trading decisions.
The beginning of the week was relatively quiet in terms of economic events. The first interesting figures were brought to us only on Wednesday (20.10.2021), when we could watch the results of the Consumer Price Index (CPI) in the United Kingdom, the euro area and Canada.
On Wednesday morning, we could see that the latest data released by the ONS (20 October 2021) showed a slight fall in UK annual inflation from 3.2 % to 3.1 %. However, overall inflation remains elevated and is not expected to change the situation ahead of the Bank of England (BOE) meeting in November.
Later came the CPI results from the euro area, which reinforced our view that there was no change from previous estimates and that the continued rise in annual inflation in the euro area was putting pressure on the European Central Bank (ECB).
At the end of the day, we got CPI results from Canada, which again brought stronger numbers and we remain in an uptrend here as well. These results are the last key input before the Bank of Canada (BOC) meeting this week on Wednesday (27/10/2021).
In general, it can be argued that a higher than previous/expected CPI value has a positive impact on the currency - bullish.
The end of the week brought us some more interesting UK retail sales data, which came in slightly better than September (previous -0.6 %, current -0.2 %). One thing to note is that the easing of restrictions hasn't exactly led to a major change in consumer behaviour, and retail sales in stores are still subdued...
At the very end of the week, Fed Chairman Jerome Powell remarked that high inflation is likely to ease. But it will probably last until next year. As soon as he started speaking, we could see the US dollar strengthening. Powell is going to run the attrition through Q1 and then call for a rate hike.
The beginning of this week can be almost calm. Change will come mid-week.
As I mentioned, we have a BOC meeting on Wednesday with a decision on interest rates. A day later on Thursday will bring us important data on Japan's interest rate change early in the morning.
This means that we expect significantly higher market volatility in the second half of the week.
Sources:
We bring you another short summary of economic events that have affected our trading
during the last trading week.
Last week was again marked by interest rates. Australia offered us a decision on interest rate changes on Tuesday and New Zealand the day after. This type of economic indicator is one of the most important for us to follow. In general, a higher than expected (previous) interest rate is bullish for a given currency. Conversely, a lower one is bearish.
As I mentioned above, on Tuesday, Australia offered us a decision on interest rates, which as expected remained unchanged (0.10 %). According to Reuters, the objectives are clear: maintain the money rate target at 10 basis points and continue buying $4 billion of government securities per week until at least mid-February 2022. The central scenario says that the conditions for a rate hike will not be met until 2024.
On the same day, we were impressed by the speech of the President of the European Central Bank (ECB) - Christine Lagarde, who reacted to the shortage of supply and the rising price of energy. Lagarde noted that these phenomena cannot be influenced much by our monetary policy, so we should not overreact to them. However, she will continue to pay close attention to the evolution of wage inflation expectations to ensure anchoring at 2 %.
On Wednesday, the Reserve Bank of New Zealand raised its official cash rate from 0.25 % to 0.5 %. Further removal of monetary policy stimulus is expected over time. Further, headline CPI inflation is expected to rise above 4 % in the near term. This should be positive news for the NZD in the long run.
What's in store for the current trading week?
This week we will focus our attention mainly on the GDP results in the UK and Thursday's
employment change in Australia.
Sources:
https://www.forexlive.com/
RBA Gov Lowe: https://www.forexlive.com/
We bring you further commentary on the events that affected our trading at the end of the trading month of September.
Over the past week, we have been able to look forward to speeches by central bank leaders such as Christine Lagarde (President of the European Central Bank), Andrew Bailey (Governor of the Bank of England) and Jerome Powell (Chairman of the Federal Reserve).
GBP
In Monday's speech by the BoE Governor, we were able to hear Andrew Bailey look at the various forces currently acting on the economy and what they mean for monetary policy. One of these is supply bottlenecks affecting the availability of goods and services. Bailey also said that the rate of recovery has slowed in recent months and this slowdown is still continuing. Compared to the fourth quarter of 2019, the level of GDP was 3.5 % lower in July, according to the latest data.
The emerging energy crisis in the UK is also a big topic of the week. The global gas shortage has exposed the flaws in the energy transition. The UK is more vulnerable to gas demand than most other developed economies. The lack of natural gas storage facilities in the UK, where capacity has been allowed to shrink in recent years, has amplified the risks of global fuel shortages and raised fears that energy supplies will not last.
On the back of these economic results and reports, the pound has fallen on virtually all currency pairs. I think this theme will be with us for some time to come and we will have our attention on the pound in the trading days ahead.
USD
In Wednesday's speech, the Fed chairman mentioned that the US supply-side constraint is what is really holding the economy back. Q3 GDP estimates were downgraded, though still at strong levels.
What's in store for the current trading week?
This week will again be one of the more volatile ones. Markets will focus mainly on Tuesday and Wednesday's interest rate decisions in Australia and New Zealand.
Sources:
https://www.bankofengland.co.uk/
Image source: https://www.wsj.com/articles/global-gas-shortage-stings-u-k-showing-shortcomings-in-its-energy-transition-11633005732
We bring you another summary of the most interesting economic events that have had an impact on the currency markets.
Last week was very unusual for its increased market volatility, which was caused by a series of interest rate decisions in several countries.
Our eyes were mainly on the middle of the week when these decisions were made.
On Wednesday, the Bank of Japan left its monetary policy unchanged, as expected. However, it offered a weaker outlook for exports and output, which reinforced expectations that the bank would maintain its stimulus. Japan's economy remains in dire straits, but there is light at the end of the tunnel. Japan's economy is likely to recover once the pandemic begins to fade... Everything is trending. Depending on these economic events, we have seen the Japanese yen weaken on most currency pairs.
On the same day, the Fed offered us its fundamentals, leaving interest rates unchanged. However, it was more hawkish than expected and the strengthening of the US dollar did not take long to take hold. Fed Board of Governors Chairman Jerome Powell said that there will be a gradual tapering that will end around mid-2022. However, the path of the economy continues to depend on the course of the virus. Advances in vaccination are likely to continue to reduce the impact of the crisis on the economy, but risks to the economic outlook remain.
The very next day we were introduced to the Bank of England, which again left interest rates unchanged. At this meeting, the Committee judged that the current monetary policy stance remained appropriate.
We expect this week to be a bit quieter than the previous one. However, our eyes will remain on Wednesday's GDP in the UK and the US. The week will also offer us a few more interesting outputs from European Central Bank President Christine Lagarde.
Sources:
Photo by Anna Nekrashevich from Pexels
Last week offered us a number of interesting economic results, which we used for our trading on the foreign exchange markets.
Our eyes were mostly on the US dollar and its results from US retail sales, which unexpectedly rose in August. With this surprisingly strong August report, the US dollar was unceremoniously pleased and began to strengthen confidently. Thus, from a certain perspective, US retail sales are 15.1 % higher than they were last year.
At the end of the week, the US dollar was boosted by rising yields on 10-year US Treasuries. Analysts at Goldman Sachs expect US Treasury yields to rise, but despite these economic indicators, the US dollar will fall for the rest of 2021.
The Australian dollar also offered further trading opportunities last week as it began to weaken slightly due to higher consumer inflation and mild concerns about the Delta virus mutation. RBA Governor Lowe uttered that the Delta outbreak, although delayed, did not derail the economic recovery.
In the eurozone, we were intrigued last week by ECB Executive Board member Isabel Schnabel and her additions to the latest ECB statement. Schnabel predicts that inflation in the eurozone is likely to ease noticeably next year. People are understandably worried about inflation developments, so their eyes will be on the central bank's next statements.
This week, the US and Japan will offer us interesting fundamental aspects in terms of interest rate decisions. Given such events, we expect more volatility in the markets, which will have an impact for trading.
Sources: https://www.forexlive.com/
Photo by Anna Nekrashevich from Pexels
English 
Czech 
Polish