A new trading week is here and we bring you a regular summary of the key trading events of the past week.
The markets experienced more volatility again this week. This is because of the incoming economic data from the Eurozone, the US and Canada.
The first thing we saw on Wednesday was the Canadian dollar's reaction to the Bank of Canada (BOC) rate decision for October 2021. The CAD strengthened strongly on news that the Bank of Canada was prematurely ending its quantitative easing (QE) program and limiting its purchases to USD 0 per month. In fact, it was widely expected to shrink to $1 billion/week from $2 billion/week. The Bank is ending quantitative easing (QE) and moving into a reinvestment phase, during which it will purchase Canadian government bonds for the sole purpose of replacing maturing bonds.
The Japanese yen (JPY) fared slightly worse. On Thursday morning came the announcements of interest rate changes in Japan, where the Bank of Japan left its key plans unchanged, as also expected. At his press conference, Bank of Japan Governor Haruhiko Kuroda said that he would ease monetary policy further if necessary, without hesitation. The BOJ's quarterly report shows that, Japan's economy is likely to recover once the impact of the pandemic fades. However, the economy remains in a serious state, but is trending upwards.
On the same day, it also raised the ECB interest rate decision, which it left unchanged as expected. However, the press conference where Christine Lagarde mentioned that the economy will jump above pre-pandemic levels by the end of the year was much more important for the euro. THIS resulted in a slight appreciation of the euro.
What's in store for the current trading week?
The current trading week will again bring data from central banks, which will issue their decisions on interest rate changes. Australia will bring us this data on Tuesday and the US on Wednesday. Therefore, we expect increased market volatility again on these days.
On the photo: Governor of the Bank of Japan, Haruhiko Kuroda
Photo source: https://www.forexlive.com/