Reasons to be cheerful

25 July, 2016

The overall mood in markets at the start of the week appears to be pretty positive. Equities are again close to new highs in the US, whilst bond yields have backed up from the recent lows. The message appears to be that things aren’t as bad as perhaps everyone feared. This is also seen beyond the US, with broader share indices also at new highs for the year and bond yields moving tentatively up from the lows seen earlier this month. Despite this, the data in the run up to the Bank of England meeting early in August could change this as we start to get the first true readings of the health of the post-vote economy.

Both the US Fed and Bank of Japan meet this week. The Fed decision on Wednesday is all about the subtle shifts in the statement and whether there are any further signs of intended tightening later this year. The BoJ has more scope to bring volatility to markets, given the greater likelihood of some policy action either on rates or asset purchase programs. The market is positioned for some action on both as a means to boost the flagging Japanese economy. The yen has been weakening for most of the past two weeks, although a more consolidative tone has been seen over the past week. The BoJ’s ability to influence the yen for this year has been severely limited though, so it’s not necessarily the case that greater than expected policy action will weaken the currency on a sustained basis. For today, the data calendar is very much on the light side, so trading ranges are likely to be on the tight side ahead of the central bank meetings later this week.


Source link  
Economic calendar is relatively light

Today is Martin Luther King’s Birthday, which is a Bank Holiday in the United States. As a result, the Economic Calendar is relatively light today...

US Tax Bill passes

On Wednesday, the US Senate approved the tax bill 51 for and 48 against, while the House of Representatives gave it final approval, passing it for the second time in two days after...

US dollar 'treading water'

USD is treading water ahead of the expected enactment of President Trump’s tax bill. The initial euphoria of lower corporation tax, that many...


CB Monetary Policy Unchanged

Thursday saw the latest Monetary Policy Committee (MPC) report from the Bank of England. The BoE stated that further modest increases...

No Surprises as Fed Raises Rates

The Federal Reserve, as expected, raised its benchmark interest rate by a quarter of a percentage point, to a range of 1.25% to 1.5%. The latest hike...

CB meetings dominate the week

With no impactful economic data releases on the calendar today, the markets are focusing on a plethora of Central Bank meetings scheduled...


No Surprises from BoC & ADP

In an unsurprising move, the Bank of Canada decided to hold its benchmark lending rate at 1%, after two small hikes earlier in 2017. The BoC stated...

Moderate Gains for USD

On Monday, the US Commerce Department released Factory Orders data for October, indicating that the continued strength in the Manufacturing...

OPEC Extends Output Cuts

On Thursday, OPEC (Organization of Petroleum Exporters) and non-OPEC producers led by Russia agreed to keep output cuts until the end of 2018...

  


Share: