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 saw increased volatility in the markets again, especially in the currency pairs with the British Pound (GBP). Australia and the US 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 %. The statement from the Governor of the RBA - Reserve Bank of Australia, Philip Lowe, shows that the RBA will continue to maintain the cash rate target at 10 basis points. The Board 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 vaccinations. However, the path of the economy continues to depend on the progress of the virus... How else...
The Committee decided to maintain the target range for the federal funds rate at 0 to 0.25 %. They wanted to maintain this target until labor market conditions reached an appropriate level. The Fed stuck with the "transitory" language that some thought would be removed, but added some humility to the language and said it was "expected" to be transitory.
The British Pound (GBP) had a particularly bad week, weakening on virtually all of its currency pairs. One reason for the weakness 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 responsibility to guide the markets with interest rates... To some extent he was not surprised to see a correction in the markets.
What's in store for the current trading week?
We expect a slightly quieter week this week. On Tuesday, we will hear from ECB President Christine Lagarde and BOE Governor Bailey. From the US, we will have short-term energy outlook data and Fed Chairman Powell will speak. On Wednesday, we expect more data from the US on the CPI change and unemployment. On Thursday, GDP from the UK is sure to catch our attention.