Let's look at the news event's we've got lining up this week...
The Reserve Bank of Australia is expected to keep interest rates on hold at 0.10% this week at their Rate Statement. We may see some negative remarks considering the number of states placed back in lockdown over the past month.
Also, note that the GDP fell short of expectations in Q2 slowing from the previous expansion at 1.9% to just 0.7%; although the unemployment rate declines, it was mostly due to a fall in labour force participation. With this, policymakers may delay their tapering plans as they cited they will adjust to any "significant setback" for the economy.
No interest rate changes are expected from the Canadian central bank, and officials will likely standstill ahead of the national elections after seeing the unexpected 1.1% contraction in Q2 GDP. Also, note that number crunchers are predicting a monthly GDP contraction for July mostly due to the disruption in the auto industry supply chain and weaker residential investment.
The European Central Bank is also expected to keep rates and bond purchases unchanged. Analysts are divided on whether or not the central bank will be making tapering plans, as the PEPP is scheduled to finish in Q1 next year. Scaling down the size of the purchases could make for a smoother transition to their regular QE program, but policymakers might still decide to defer any actual decision until later this year. Also, any significant revisions to growth and inflation forecasts at this time could impact taper speculations.
The Employment Change report is a measure of the change in the number of employed people in Canada. Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity. The number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labour-market conditions.
Job creation is expected to show a slower 75k gain in hiring versus the earlier 94.5k increase, which should be enough to bring the unemployment rate down from 7.5% to 7.3% in August.
9/17/2021 Stocks are down -0.58% this morning after coming down to test a significant level of support once again. While stocks fall, the dollar rises in the anticipation of sooner-than-expected tapering by the Fed along with a hike in interest rates starting in 2022. Our outlook Other than September being one of the worst months […]
9/16/2021 The Euro-Dollar pair is down over 0.5% today after several days in the red. Today's speech by EU president Lagarde mentioned how the economic recovery had come quicker than expected six months ago. This was praised by the prompt vaccine distribution so citizens could get back to work. Across the pond, the US just […]
9/14/2021 This morning's report on CPI m/m and core CPI m/m came in at a lower percentage than expected which resulted in a falling dollar pre-New York session. The USD is now volatile under the uncertainty of potential tapering and rising rates while the equities market seems to be rising because of this. Our outlook […]
9/13/2021 Big money has been moving out of Australia's currency for nearly a month now which has been the biggest drop in long contracts in this amount of time year-to-date. Australia's dollar index (AXY) is up 0.06% at 73.61 on the day after rebounding from the lows around 71.19. Our outlook Australia's economy has surprised […]