Welcome to our regular Monday recap of the most interesting economic events that affected our trading last week, which brought a bit more than the first week of the New Year.
People are starting to wake up and recover from the New Year celebrations and so are the markets.
Tuesday (11 January) was mostly in the Fed's sights. During the day, we could expect several speeches by members of the US Federal Open Market Committee (FOMC). One of the speakers was Esther George (President of the Federal Reserve Bank of Kansas City), who spoke about the outlook for economic and monetary policy in her window. Loretta Mester (President and CEO of the Federal Reserve Bank of Cleveland) would support a March 2022 rate hike if the US economy remains on track.
At the end of the day, Fed Chairman Jerome Powell mentioned that the US economy has been expanding at a very fast pace in recent years and that the labour market is strong...
Other Fed officials are calling for more aggressive balance sheet normalization. Powell's comments suggest that he disagrees with this thinking and there was a slight weakening of the USD during his speech.
Powell's entire speech:
A day later, on Wednesday (12 January), we were interested in the latest data from the US Consumer Price Index (CPI), which is key for measuring inflation and purchasing trends.
The current figure was slightly better than the previous one (0.6% compared with 0.5%).
On Tuesday, before a series of speeches by Fed members, ECB President Christine Lagarde gave a speech on the pressure of rising prices, which must be taken very seriously. The ECB expects inflation to fall this year and return below the 2% target in 2023 and 2024.
At the end of the week, we were expecting new data from the UK on manufacturing output, which came out positive: 1.1% actual versus 0.1%.
What's in store for the current trading week?
This week will be rich in fundamentals. On Tuesday, the Bank of Japan will comment on monetary policy and release new data on interest rate changes. On Thursday, the ECB will publish its monetary policy meeting report. We expect increased volatility in the JPY and EUR markets these days.
Pictured: Federal Reserve Chairman Jerome Powell