We bring you our regular Monday commentary on the economic events that affected our trading in the past trading week.
GBP
Earlier this week (23 November), data came in from the UK, which brought changes to the Purchasing Managers' Index (PMI) for October 2021. In general, there were no major increases or decreases compared to past values. However, they were largely more positive than expected.
NZD
The main topic last week was the decision to change interest rates in New Zealand. As expected, the Reserve Bank of New Zealand (RBNZ) raised the cash rate by 25 basis points to the current 0.75%. The Committee agreed that it was still appropriate to continue to reduce monetary stimulus in order to maintain price stability. A range of economic indicators demonstrate that New Zealand's economy is performing above its potential.
The RBNZ Governor, Adrian Orr, said at the meeting that a 25 basis point hike provides more options, but we need to be cautious given the huge debt.
In response to this news, the NZD started to react a little differently than we would have expected. In the second half of the week, it was weakening... This is probably due to the fact that the RBNZ was not hawkish enough. The rate hike was expected and Orr's rhetoric was rather balanced when he mentioned the huge debt.
USD
On the same day (24.11.) came data from the USA regarding GDP. The quarter-on-quarter result came out significantly negative from the previous 6.7% to 2.1%.
WORLDWIDE
In the first half of the week, the markets behaved somewhat normally and in their standard manner. But this has been shattered by a major report on the spread of a new mutation of Covid from South Africa, which many experts believe is a threat. Countries such as Italy, Germany and Japan have tightened controls at airports and banned the entry of travellers from South Africa.
The markets reacted to these "shocks" in a rather confused manner. In any case, we will watch how the situation develops and wait to see what trend the markets take.
What's in store for the current trading week?
Apart from the aforementioned monitoring of events regarding the new spreading mutation of the virus, we will turn our attention in the current trading week to Wednesday's data coming from the Eurozone (CPI) and to NFP coming from the US.
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