1 February, AtoZForex.com, Lagos – The Japanese yen ended last week as the largest currency mover on Friday after the Bank of Japan unleashed new methods to fight growing economic worries. Governor Kuroda deployed negative interest rates to support the ongoing quantitative easing program, therefore sending the yen falling across board. The move can be seen as an obvious effort to weaken the yen, alongside achieving its goal of spurring bank lending, as the economy continues to battle deflation and weakness.
As expected, Federal Reserve officials opted to leave interest rates unchanged at <0.50% in their meeting last week, reiterating that they still expect to raise borrowing costs at a “gradual” pace while watching to see how the global economy and markets impact the U.S. outlook. The Fed statement said, “closely monitoring global economic and financial developments and is assessing their implications for the labor market and inflation, and for the balance of risks to the outlook.” Notably, the Fed excluded a line which was included in December which stated that the risks to the outlook were “balanced.”
As we step into a new week/month, the fundamental calendar is packed with key economic releases with key speech from ECB president Draghi and RBNZ Gov. Wheeler. On top of these speeches there is the US NFP 192k forecast, rate decisions, UK Official Bank Rate and interest rate decision from Australia and more.
ECB President Draghi Speaks
The European Central Bank (ECB) president is due to testify about the 2015 ECB Annual Report before the European Parliament, on Monday. In Draghi’s last speech at the Deutsche Borse New Year’s reception, in Frankfurt, he clarified that the Eurozone faces two major challenges coming into the new year: a strengthening domestic economy and a weakening global one. Domestic conditions depict a consumption driven recovery. Which is being supported by accommodative monetary policy, falling energy prices and a neutral fiscal policy. On the bright side, employment conditions are also rising with more that 2 million people employed compared to 2013. However, the challenge is that the world economy is in a state of uncertainty. Driven by China worries and other emerging market issues leading to a slowdown in global demand and financial market uncertainty. On Thursday, Draghi is again due to speak at the Deutsche Bundesbank’s Marjolin Lecture, in Frankfurt.
RBA rate decision
The Reserve Bank of Australia is largely expected to refrain from any further rate cuts for now, having reduced the cash rate from 2.5% to 2.00% in the past year. On Wednesday, we also have the Building Approvals m/m and trade balance figures due for release. While we have the Retail Sales m/m and the RBA Monetary Policy Statement on Friday.
UK Official Bank Rate
On Thursday, the rate is expected to remain at 0.5% amid concerns of a China triggered slowdown in the global economy. Governor Mark Carney has also made it clear that the central bank does not have enough reason to commence raising rates yet. The MPC Official Bank Rate Votes is also expected to remain as 1-0-8 with Ian McCafferty remaining the only decenter. We also have the Manufacturing PMI due on Monday, Construction PMI and services PMI due on Tuesday and Wednesday respectively.
RBNZ Gov Wheeler Speaks
On Wednesday, the Reserve Bank of New Zealand Governor Wheeler is due to deliver a speech on “The Global Economy, New Zealand’s Economic Outlook, and the Policy Target Agreement” at the Canterbury Employers’ Chamber of Commerce. On Tuesday, we have the GDT Price Index, Employment Change q/q, and the Unemployment Rate.
Non-Farm payroll report
After many months of impressive streak in the NFP report, showing above 200k change in the number of employed people during the previous month, excluding the farming industry. The previous report showed 292k jobs added, a very impressive report, compared this week’s NFP 192k forecast. The Unemployment Rate is expected to remain at 5.0%. Other news for the US this week includes ISM Manufacturing PMI, ADP Non-Farm Employment Change and ISM Non-Manufacturing PMI.
Think we missed something? Let us know down in the comments section.