Weekly Outlook, 20- 24 September

Nothing but Central Banks!

Market analyst – IFC Markets

Central banks meeting in the US, Japan, UK, and Switzerland have turned this week into a crazy week, after different and mixed data from developed economies, especially after the Chinese central bank surprise by injecting $14 billion of funds in the money market. These monetary policy meetings and press conferences will tell us about policymakers’ outlook on virus development and global economic growth. Let’s take a quick look at the week ahead and the most important data to watch. 

#Holiday and Election – Monday 

Japan and China will be closed on Monday. Japanese will cherish the “Respect for the Aged Day” and Chines celebrating Mid-Autumn Festival. On the other hand, Canadian Federal Election will take place on Monday, September 20, to elect members of the House of Commons to the 44th Canadian Parliament. So since the biggest Asian markets will be closed, the lack of liquidity can increase the market risk. 

Economic data – Across the week. 

Let’s check the most important events and economic data before reviewing the central bank’s meetings. RBA meeting minute on Tuesday, US Housing data on Tuesday, Wednesday, and Friday. Thursday will be about flash PMIs for the Euro area, UK, and the USA while the German IFO business climate on Friday should follow closely. 

FED Interest Rate Decision, Monetary Policy Statement, and Press Conference. – Wednesday 

After strong economic data from the US, and weakness in the labor market that we saw on last Thursday’s data, this week investors are looking at policy makes outlook on the pace of the labor market recovery, and whether they still believe that higher interest rates are transitory or not? Despite all denies by FED chair Mr. Powell, we have so much evidence that inflation is stickier than they thought. More than everything, this meeting will increase the marker risk and vitality before the news and few hours after that, so stay safe and try to have your trade after the news. 

Boj Interest Rate Decision, Monetary Policy Statement, and Press Conference. – Wednesday

Last week, Mr. Kuroda, the head of the Japanese central bank highlighted the downside risks, and the economic growth was decreased on the central banks’ outlook with stressing on high virus uncertainty. This environment reinforces the view of holding policy. So most probably BoJ continues monetary easing and will extend special programs if needed. This outlook must put the Japanese Yen under more pressure. 

 

BoE Interest Rate Decision and Monetary Policy meeting – Thursday 

In the past weeks, better than expected economic data and employment development, along with the growth of inflation to 3.2%, paved the way for the beginning of strict policies. Despite the last few days fall after stronger USD, Sterling used to be supported by positive data and hawkish expected policies of BoE. Also, we should not forget about MPC voting, which is expected to show support for a potential rate hike, even if it will not going to happen in this meeting. 


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