- Analytics
- Fundamental Analysis
- Four Banks in Focus!
Four Banks in Focus!
The week ahead will be a banking week, where 3 major banks and two emerging economies will have an interest rate decision and Press conference, while RBA will publish its meeting minutes. Let's take a short look at what we are waiting to see this week.
Banks on focus!
RBA meeting minutes – Monday 15. March
RBA is the starter with publishing its February meeting minutes. At the mentioned meeting, board members decided not to change the interest rate while unexpectedly extended the QE program. While the bank's statement after the meeting was repeating that economic recovery will be "bumpy and uneven," mentioning that the country's economy will be able to "return to its end-2019 level by the middle of this year". This meeting minutes will give us more details about board member's expectations and their view on economic development fate, especially with vaccination progress. Generally, we are not waiting for any surprises.
Fed Interest Rate Decision - The event of the week. – Wednesday 17 March
In the week ahead, eyes will be on the FED meeting. After Bonds Yields growing in past weeks and worries about that, many are waiting to see the FOMC member's reaction. With the latest 1.9T Biden's stimulate package, more budget for QE is expecting. Market positive sentiment will decrease investors' interest to buy more Bonds, which will increase the borrowing cost and negative effects on the economy in a bit longer time. All these together will put the FED on its current policy to emphasize that economy still has a long way to full recovery, and they will hold the supports until its goals are met. Rates are still expecting to stay at the same level, while a bit Hawkish or less than expected dovish tone is awaited in Powel's press conference. There is one more thing that is coming to be important. Where Treasury Secretary Yellen significantly has a much better employment outlook. Last week she mentioned that the "Biden Administration’s recent fiscal support package could allow the labor market to recover to full employment by the end of next year," we need to see whether the FOMC members also agree with her or have a different outlook.
BOE and forgetting negative rate scenario! – Thursday 18 March
While Monetary Policy Committee (MPC) decided “it would be appropriate to start the preparations to provide the capability to (implement a negative Bank Rate) if necessary in the future,” Jonson's administration's great performance on the vaccination brought a positive sentiment to the financial markets, which plays down the possibility of the negative rates. It's also expected to see that BOE will hold the supports until full recovery of the labor market and achieve the 2% inflation target. We expect to see that MPC members' comments to be started about the hiking in rates in the next two years to reach the 25-bps hike in the next 5 years, which means Hawkish tone of BOE statement. Generally, at this stage, higher bond yields, which have hit the UK Gilts market, will lower the dovish policy acts.
BoJ - More caution than others! - Friday 19 March
At the December Policy meeting, BoJ members said that “The Bank will assess various measures conducted under the framework and make public its findings, likely at the March 2021 Monetary Policy Meeting.” And now, it's the time, that's why Friday's meeting gets much more important and uncertain. After the January comment from BoJ Governor Kuroda, where he mentioned that economy is at uncertain risk, it seems they still have the same caution because we did not hear any positive comment after that. Like other developed economies, 10-year JGB (Japanese government bond) rose to a two-year high of 0.115%, so it's expected to see more purchases of equity Exchange Traded Funds (ETFs). However, no change is expected in rates to see here as well.
Turkey is still raising the Repo Rate. Wednesday 17 March.
As one of the main developing economies, Turkey has been hitting too hard by pandemic since it depends too much on the tourism industry. After a significant TRY fall in 2020, the new central bank governor and finance minister started the higher repo rate policy to raise it to the current 17% from the previous 9.75%. It is expected to rise to 18% in Wednesday's meeting.
RCB on Hold! - Friday 19 March
Russia is another emerging economy whose central bank will hold the meeting to decide the interest rate. “The Bank Rossii” decision on the short-term interest rate will be on Friday. Since it is one of the countries that started the vaccination much earlier than any other countries by its own Sputnik Vaccine and higher WTI prices backing the economy, with 4.25% rates close to Russian standards, RCB most probably will hold the rates and current monetary policy.
- Get Certificate
Retail sales! - USD, AUD, CAD
Retail sales are usually followed closely by market participants. It is one of the main indicators that can tell us the future GDP number and confirm whether the economy is on the right foot or no. US retail sales on Tuesday is the most important data before the FED meeting, and it's expected to fall 0.6% in February. However, thanks to $1,400 checks of Biden's stimulate package, retail sales are expected to rise again in March and April. Australian and Canadian retail sales data also will be published on Friday, and same as the USA, for both of them also soft reduction is expected to see.
Employment data - USD & AUD
US initial jobless as every Thursday, this week also will be in focus, and it's expected to fall to 705K, the lowest number since March 19, 2020, confirm that economy is growing. Australian Employment Change for February is also expected to rise to 30K.
Source: https://tradeproskills.com
Trade with a trusted and internationally recognized broker
