Weekly Trading Update

What will the Bank of England do on Thursday?



After the Fed’s turn in the spotlight last week, the Bank of England step up to the plate on Thursday.

US
There are no big statistics to be announced this week for the US, the only real noticeable figures include the Flash Manufacturing and services PMIs on Wednesday, but do not underestimate the impact last week’s Fed meeting will have on Monday’s open.

The Fed might have decided to keep its benchmark interest rate close to zero, but with current inflation rates sitting at 5%, and many experts of the opinion real inflation actually sits at over 10%, the decision to leave interest rate increases till 2023 could be costly in the short term.

US markets only took a slight hit in reaction to the news on Wednesday evening, but with a week to digest the news, the US Monday bell might be a volatile one, with the Dow and S&P possibly breaking out in either direction.

The other thing to watch out for next week is Fed chair Powell testimony on Tuesday.

UK
This week is an important one for the UK in general. On Thursday we will see how the Bank of England plans to deal with the current inflation crisis.

All eyes will be on whether the MPC choose to follow suit with the Fed’s decision on Wednesday to keep interest rates close to 0, or if they will be the first to make a stand against inflation and raise current interest rates.

The more likely scenario we will see is the MPC leave interest rates alone, in the hope inflation will slowly decrease over the coming months, as the alternative (raising interest rates) could have catastrophic repercussions countrywide.

On Monday we also see what should have been the day England finally removed all covid lockdown restrictions, but with the date being pushed back 4 weeks to July 19th, it is highly possible we will see a bearish reaction from the FTSE.

The UK will also release their Manufacturing and Services PMIs on Wednesday, and CBI realised sales on Friday.

Eurozone
Similar figures will be released in the Eurozone this week. On Monday we will see the German Buba Monthly report, followed up on Wednesday when Germany will release both its manufacturing and its services PMIs.

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