Bank of Japan will be holding its monetary policy meeting this week.
This article is originally referred from Orbex Market Report.
What’s happening in the market and What to focus on this week?
Check out the current market trend and the important economic events below!
- After two consecutive week of decline, the AUD managed to close W37 with some bullish gains. The AUD advanced 0.72% suggesting a potential turn around in price action.
- The CAD was seen recovering from the previous week’s decline of 0.77% to rebound strongly. The CAD jumped 1.02% last week. Price action remains flat in the longer term however.
- The CHF was bullish as it advanced the 0.05% gains from the previous week to close W37 with 1.53% gains. The reversal signals a potential weakness in the U.S. dollar.
- The euro posted modest gains on the week rising 0.64% after falling 0.39% previously
- GBP gained 1.10% on the week which could suggest a potential reversal in the trend. The gains come after the GBP fell 0.05% the week before
- JPY continued to extend losses from 0.04% the week before to fall 0.89% last week
- NOK jumped 2.27% reversing the 0.70% decline from the week before. The gains on higher oil prices
- NZD posted modest gains of 0.20% on the week after shedding 1.05% the week before.
- USD fell 0.18% last week after a flat print previously
- China’s consumer price index rises 2.3% on an annualized basis for the period ending August 2018. Data beat estimates of a 2.1% increase. Producer prices however ease, rising 4.1% compared to 4.6% previously. Domestic demand fuels growth in consumer prices. Producer price index declines stoking concerns of a slowdown that could hit China. Declines expected further down the road due to the deteriorating trade relations with the United States.
- Monthly GDP in the UK advances 0.3% in July. Data was higher than the forecasts of a 0.2% increase and up from 0.1% in June. July’s GDP data suggests a strong start to the third quarter. Manufacturing production remains weak, falling 0.2% on the mont h. Industrial and construction output advances better than expected.
- Wages in the United Kingdom advanced strongly in the three months to August. Average earnings including bonuses increase 2.6%, beating estimates of a 2.4% increase. UK’s unemployment rate holds steady at decade lows of 4.0%. Uptick in wages stokes speculation of price pressures on the consumer price index.
- Bank of England keeps monetary policy unchanged. BoE’s interest rates at 0.75%. The central bank expects to see growth rise in the third quarter to 0.5%. Central bank officials expect growth to come from rising household demand. The BoE Governor Carney also confirmed that he would extend his tenure until 2020. Carney held high level meetings with the PM Theresa May and other senior members of the Cabinet.
- Producer prices in the U.S. decline 0.2% on the month. This is the first monthly decline since February 2017. Consumer prices were seen to be flat. Headline inflation rose 0.2% on the month in August. This brought the headline CPI to 2.7% in August, slower than July’s gains of 2.9%.
- Australia’s labor market jumps in August. The economy was seen adding 44,000 jobs during August. This beat estimates of a 15,000 increase. July’s job gains revised lower. Australia’s unemployment rate holds steady at 5.3%. Underlying pressures suggests that wage growth could start to rise.
- CB held rates steady and the monetary policy meeting was a non-event. ECB President Mario Draghi stuck to the status quo as the central bank highlighted the risks of a trade war.
Economic Highlights – The Week Ahead
- Bank of Japan will be holding its monetary policy meeting this week. No changes are expected from the central bank after its recent decision to remove the timeline for achieving the 2% inflation target rate. Furthermore, the upcoming legislative elections are also expected to see the central bank from taking any decisions.
- The Swiss National bank will be holding its quarterly monetary policy meeting this week. The interest rate on sight deposits are expected to be untouched at -0.75%. The SNB is likely to maintain a steady tone and wait for the ECB to make the first move. With the ECB noting that interest rates will remain steady until middle of next year, the SNB is also likely to follow the same timeline.
- The European Central Bank President, Mario Draghi will be speaking this week. Draghi is expected to deliver his remarks at the Economic Union conference in Berlin. While investors remain clued into the event, Draghi is most likely to stick to the narrative. At the recent ECB meeting, Draghi highlighted the risk of trade wars which could slow economic growth.
- Data from the U.S. for the week ahead will see reports from the housing sector. The building permits and housing starts reports will be lined up this week. Recent data showed the housing market being hit by higher borrowing costs. The data could likely show if this was only temporary. The week ahead is also a blackout period ahead of the Fed meeting due the week after.
- Canada will be releasing its monthly inflation figures this week. The data comes following a strong surge in consumer prices during the months before. A continuation of this trend could eventually pressure the Bank of Canada to raise interest rates. The BoC held rates steady citing reasons such as the uncertainty on the NAFTA deal. At the same time, the BoC noted that rates would continue to rise gradually. The BoC, at its recent meeting also noted that inflation could ease back in the near term
Original Source: Orbex Market Report