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Review of the key events for the upcoming week 21.09 - 27.09

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Review of the key events for the upcoming week

The financial market environment remains tense. Uncertainty was increased by the outcomes of the of The Federal Reserve System, Bank of England and Bank of Japan sessions. The Fed predicts a long period of low interest rates and is still ambiguous about the prospective future development of the US economy. The Bank of Japan slightly improved its assessment of the current situation in the country, but did not rule out easing of monetary policy in the future. The Bank of England started to consider the idea of setting negative rates in order to neutralize the consequences of the pandemic and a possible Brexit outcome for the economy.

It is obvious that the process of recovery of the world economy to the pre-crisis level will take much longer than previously expected.

During the upcoming week, investors will closely follow the latest macroeconomic statistics and the speeches of Jerome Powell, the Chairman of the Federal Reserve System, and Andrew Bailey, the Governor of the Bank of England.

 

September 21st, 22nd

Jerome Powell, the Chairman of the The Federal Reserve System, is giving a speech

No big surprises should be expected from Powell's performance. In recent weeks, Powell has repeatedly expressed his opinion considering the future plans of the regulator to implement monetary policy. The regulator is ambiguous about the prospective future for the development of the US economy and predicts a long period of low interest rates. Following the main outcome of the Federal Reserve session, Powell noted that interest rates will remain low as long as inflation remains below the 2% target. Most likely, the market reaction to Powell's speech will be restrained

 

September 22nd, 24th

Speech of Andrew Bailey - the Governor of the Bank of England

The statement made by the Bank of England last week on the possible establishment of negative interest rates came as a surprise to many market participants. The regulator believes that this measure will help cope with the consequences of the pandemic, tough Brexit and rising unemployment. In his new speeches which will be given during this upcoming week, Bailey may reveal the details of further actions by the regulator to implement monetary policy. Volatility of all currency pairs involving the pound sterling may increase significantly.

 

September 23d

Preliminary PMI data for the German manufacturing and service sectors for this September

The German economy is still showing good recovery from a sharp halt in the early spring. Economic activity in key sectors of the economy continues to present better results. Experts predict further growth in activity of the manufacturing and service sectors. Stronger data may provide significant support for the European currency, since the prospects for the recovery of the entire EU economy largely depend on the state of the German economy.