This week belongs to Central banks – almost every day capital markets will take a look at some of the key regulators and consider its decisions about credit and monetary policy. No steep turns are expected – time has not come for those – but volatility promises to be high.
GBP: not everyone remembers about Brexit
The Bank of England is going to have another meeting. The interest rate remains at 0.10% annually, as before. Clearly, time for its revision has not come. We are mostly interested in the volumes of the PEPP and the comments of the regulator on the state of the economy after the meeting. Many might have forgotten but the transition period inside Brexit is coming to its end – there are slightly more than three months left. This time is not quite enough to agree on disputable questions which are abundant. Any softening of the monetary and credit system will be a stress for the GBP.
On the macroeconomic calendar, a block of price data is also expected: from inflation to the RPI and PPI Input and Output. Normally, the British RPI stabilizes by itself, without any interference of the regulator – and now investors will start looking for the confirmation of this.
JPY: the yen risks new stimulation
The September meeting of the BoJ is expected to be calm; the interest rate is going to remain negative, at -0.10% annually. With time, the BoJ starts pressing on the economy harder for the sake of stimulation. Most probably, we will start seeing hints on further extension of economy stimulation programs – there are no other options for restarting the system. Normally, the JPY does not react on statistics but the meeting of the BoJ is a separate thing.
USD: the Fed must remain calm
The US plans to issue another flow of statistics. We need to have a look at the industrial production volumes. Last time, the indicator grew by 3%, now it may grow by 1.5%, which is good. The event of the week is the meeting of the Federal Reserve system with comments on the state of the economy and the decision on the interest rate. For now, the latter remains at 0-0.25% annually. In fact, it is zero, but the market is utterly interested in some new stimulation schemes. Any hints on them will drop the USD.
RUB: the Bank of Russia has options
The Bank of Russia will have a meeting on Friday. The key rate is at 4.25%, and most likely, this time it will not be changed. Nonetheless, the probability of a decline for 25 base points is already included in the rate of the RUB. There might be steep momentarily movements but strategically, they change nothing.
Brent: stuck below 40 USD per barrel
The second week of September turned out quite stressful for oil due to the fears of the second wave of the coronavirus and the risk that the demand for the key markets for energy carriers will shrink. On Monday morning, a barrel of Brent trades below 40 USD and is likely to remain between 38-42 USD this week if the US inventories grow again.