What Will Likely Move Markets This Week – Introduction
The most certain thing about the financial market is how uncertain it is. In the market, it is almost impossible to predict what will affect the market in the following day. If we did, everyone would be making a lot of money. For example, a few weeks ago, the week started in a normal way. No one expected Argentina to develop problems. On a Tuesday, the country’s currency started falling, leading to a major sell-off in the main EM countries. In this article, I will highlight a few things that I expect will move the market this week.
UK Economic Data
Last week, the sterling was among the most volatile currencies. On Wednesday, it jumped after Germany and UK made concessions on the ongoing Brexit negotiations. On Friday, transcripts of the main negotiator for the EU showed that the EU was ready to make concessions. This lowered the risks of a no-Brexit deal. On Sunday, Boris Johnson, a conservative leader many hope will replace Theresa May wrote a scathing article criticizing the Chequers deal. Therefore, this week, traders will follow closely the ongoing in the UK about Brexit.
Today, the country will release important data such as the GDP, industrial production, trade balance, manufacturing production, and construction. On Tuesday, it will release the employment numbers and on Thursday, the BOE will release the interest rates decision. On Friday, Governor Carney will address the press on the interest rates decision. All this will make the sterling a major currency to trade this week.
The ECB will start its meeting on Wednesday. On Thursday, the officials will release the interest rates decision. In this meeting, the bank is not expected to raise interest rates but the officials are expected to show clarity on the monetary policy stand. For example, the bank will likely explain whether it is still committed to end QE in December and what it means by a summer rate hike.
Last week, the public hearings phase of the proposed tariffs by US on Chinese goods worth $267 billion ended. On Friday, the president announced that people should start preparing for these tariffs. This led to a detailed letter by Apple, which said that the additional tariffs will mean higher taxes to the residents. On Saturday, the US president asked Apple to consider manufacturing its products in the United States to avoid the tariffs. This came a few months after Apple’s Chinese manufacturer, Foxxconn announced a new US plant. Therefore, traders should expect major market moves this week after the tariffs go to effect and as China retaliates.
In the past few weeks, the problems in the EM markets have increased. Turkey was the first EM country to develop problems when the rate of inflation increased to above 18%. This year, the Lira has dropped by more than 60% against the dollar. It was followed by Argentina, Indonesia, and South Africa. The latter is in recession and Argentina is waiting for the bailout money promised by the IMF. Last week, the Indonesian central bank was forced to raise interest rates as its currency fell to a 20-year low against the dollar.
What Will Likely Move Markets This Week – UsefulTips