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 could notice again increased volatility on the markets, especially on the currency pairs with the British pound (GBP). Australia and the USA also brought us interesting economic news.
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%. A statement by the Governor of the RBA - Reserve Bank of Australia, Philip Lowe, shows that the RBA will continue to keep the cash rate target at 10 basis points. The Board of Directors 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.
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 vaccination. The path of the economy, however, continues to depend on the course of the virus... How else...
The Committee decided to maintain the target range for the federal funds rate at 0 to 0.25%. They want to maintain this target until labour market conditions reach an appropriate level. The Fed stuck with the "transition" language, which some thought would be removed, but added some humility to the language and said it was "expected" to be transitional.
The British Pound (GBP) had a particularly bad week, weakening on virtually all of its currency pairs. One reason for the weakening 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 duty to steer the markets with interest rates... To some extent he was not surprised to see the correction in the markets.
What's in store for the current trading week?
We expect a slightly quieter week this week. On Tuesday, ECB President Christine Lagarde and BOE Governor Bailey will speak to us. From the US, we will get data from the short-term energy outlook and Fed Chairman Powell will speak. On Wednesday, we expect more data from the US on the CPI and unemployment. On Thursday, GDP from the UK will definitely catch our attention.