#RingTheBell week 24-2019: Spotlight on FED, BOJ and BOE

What will happen during week 24, 2019? Here is something traders will focus on before the Bell rings

This week, investors will continue to focus on the ongoing issues on trade ahead of the G20 summit in Osaka, Japan (the summit will take place on 28th – 29th June). Investors believe that the meeting could lead to a truce between United States and China if Trump meets with Xi. Trump has expressed his desire to meet with his ‘good friend’ Xi while China has not responded on whether the meeting will take place.

Trump believes that he has leverage over China because of the large amount of goods the US imports from China. China on the other hand believes it has leverage because of the many American companies that operate in the country.

Trade War Explained: Where we are and where we are headed

 

FED, BOJ and BOE will release interest rates decision

The Federal Reserve will be on the spotlight this week. The Federal Open Market Commission (FOMC) will meet on Tuesday and make the interest rates decision on Wednesday. Investors expect the Fed to leave rates unchanged at the current range of 2.50% and 2.75%. In recent weeks, the Federal Reserve officials have pointed to lower interest rates in the future as the trade war continues.

In fact, recent data from the US has been weak. This month, the non-farm payrolls data showed that the economy added just 75k jobs in May. This was lower than the expected 180k. Last week, data from the US statistics office showed that inflation had eased in the past month.

 

On Thursday, the Bank of Japan (BOJ) will also be in the spotlight as it delivers its interest rates decision. Investors expect the bank to leave rates at the current negative level of -0.10%. In the past meeting, Governor Kuroda said that that rates could remain at the current levels for a longer period of time. While the Japanese economy has been relatively strong, the biggest challenge has been inflation.

The country’s inflation rate remains below the BOJ target of 2.0%. The reason for this is that the country’s workforce is different than that of other countries because they tend to have loyalty to their companies. The labor mobility is not very pronounced in the country. In addition, with the Japanese population aging, the consumer purchases activity is always subdued.

 

Investors will also focus on the Bank of England (BOE), which will deliver its interest rates on Thursday. As with the Fed and BOJ, the Fed is expected to leave interest rates unchanged at the 0.75% level. This is because the country is currently in a transition period after Theresa May announced plans to resign.

The conservative party is currently campaigning on who will replace her and the leader is Boris Johnson. Boris has promised to take the country out of the EU, with or without a deal. Therefore, the BOE will need to balance this as it makes its decision.

What Next After Theresa May’s Resignation?

 

More data day traders have to focus on

Other than the interest rates decisions, investors will also receive important market data:

  • Monday – they will receive the German Buba monthly report, the minutes of the recent BCB interest rates decision, and the NAHB housing market index for June.
  • Tuesday – they will receive the RBA minutes, German PPI, EU CPI data, and the API inventory data.
  • Wednesday – they will receive the current account data from New Zealand, Japan trade data, Sweden consumer confidence data, and UK and Canada inflation numbers.
  • Thursday –  they will receive the New Zealand GDP data, UK retail sales, and Philadelphia Fed manufacturing index.
  • Friday – they will receive the French PMI, EU PMI, Canadian retail sales, and US existing home sales data.

 

Other Helpful resources

Buba monthly reports

Differences Between EIA and API – Investopedia

The whole Economic Calendar – Investing

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