The Week That Was
- FOMC Meeting Disappoint investors – On Wednesday, July 27th, the Federal Reserve monthly meeting delivered what investors expected. The Federal Reserve Open Market Committee kept its overnight interest rate target in the 0.25 percent to 0.50 percent range. However, the Fed indicated that the labor market has strengthened and said other indicators were pointing to growth.
- BoJ Meeting, Yen Surges amid BoJ Fiscal Stimulus Program – On Friday, July 29, the Japanese Yen soared over 3% against the U.S. Dollar to close the week at $102.36 after the Bank of Japan expanded its stimulus program, but at a less than investors had anticipated. Traders were disappointed by the BoJ’s decision to double purchases of exchange-traded funds (ETFs). Japanese prime minister Shinzo Abe approved a stimulus package of 13.5 trillion Yen, both in direct government fiscal policy and loans.
- US & UK GDP Data Released – US GDP grew by 1.2% in the second quarter, less than markets expectations of 2.6%. However, the US GDP rose more than the first quarter of 0.8%. UK gross domestic product (GDP) rose by 0.6% in the second quarter, a week after the decision to leave the European Union. The figure is above expectations, as estimates predicted 0.5% growth.
- Gold Rises, Oil Sinks – Gold climbed last week amid Fed announcement to leave interest rate unchanged and signaled that economic risks reduced. The Federal Reserve did not indicate for any rate hike at their next meeting in September. The chance for a rate hike in September decreased to 12% compared to 18% the day before and 22% on Tuesday according to Fed Funds Futures. Gold closed the week at 1349.62, $26 higher than the previous week. Crude oil closed last week below $42 at $41.23 per barrel as data released on Wednesday showed oversupply in the market. Brent Oil dropped $3.05 of its value, to close the week at $43.11. According to the report released by US EIA, last week crude oil inventories rose by 1.7 million barrels while total domestic crude production also scaled up by 21,000 barrels to 8.515 million barrels a day.
The Week Ahead
1. Australia Rate Decision & Rate Statement – On Tuesday, the Reserve Bank of Australia will announce its interest rate decision. The RBA is expected to cut the rate from 1.75% to 1.50%. The RBA will also publish its quarterly statement on Monetary Policy on Friday and, given the June quarter underlying inflation figures were in line with its previous thinking, no change in forecasts is expected this time around.
2. Shinzo Abe (BoJ) announce Fiscal Stimulus Package – On Tuesday, Japan’s prime minister will announce 28 trillion Yen ($360 billion US Dollar) fiscal package. This is the official figure to be released by Abe and reflects about 6% of Japan’s GDP.
3. Bank of England Rate Decision – On Thursday, the BoE is expected to cut interest rate to 0.25%. Additionally, BoE is expected to increase its quantitative easing by another £50 million pounds.
4. US Nonfarm Payrolls – On Friday, Nonfarm Payrolls will be released as the forecast stands on 175k. Last month, 287k additional jobs were added and the figure increased the expectations for another rate hike in September.