We bring you further commentary on the events that affected our trading at the end of the trading month of September.
Over the past week, we have been able to look forward to speeches by central bank leaders such as Christine Lagarde (President of the European Central Bank), Andrew Bailey (Governor of the Bank of England) and Jerome Powell (Chairman of the Federal Reserve).
In Monday's speech by the BoE Governor, we were able to hear Andrew Bailey look at the various forces currently acting on the economy and what they mean for monetary policy. One of these is supply bottlenecks affecting the availability of goods and services. Bailey also said that the rate of recovery has slowed in recent months and this slowdown is still continuing. Compared to the fourth quarter of 2019, the level of GDP was 3.5 % lower in July, according to the latest data.
The emerging energy crisis in the UK is also a big topic of the week. The global gas shortage has exposed the flaws in the energy transition. The UK is more vulnerable to gas demand than most other developed economies. The lack of natural gas storage facilities in the UK, where capacity has been allowed to shrink in recent years, has amplified the risks of global fuel shortages and raised fears that energy supplies will not last.
On the back of these economic results and reports, the pound has fallen on virtually all currency pairs. I think this theme will be with us for some time to come and we will have our attention on the pound in the trading days ahead.
In Wednesday's speech, the Fed chairman mentioned that the US supply-side constraint is what is really holding the economy back. Q3 GDP estimates were downgraded, though still at strong levels.
What's in store for the current trading week?
This week will again be one of the more volatile ones. Markets will focus mainly on Tuesday and Wednesday's interest rate decisions in Australia and New Zealand.