Major events of the upcoming week
The soft tone of the Fed's statements and strong macroeconomic statistics from the United States in China stimulated an increase in risk sentiment in financial markets. Investors are betting on accelerating the recovery of the global economy, despite the third wave of pandemics and vaccination problems.
Apparently, last week a Federal Reserve managed to convince the market that stimulus policies will be implemented for a very long period of time, despite the increase in inflationary pressure in the United States. How long the Fed's verbal interventions will take is a big question. Obviously, strong statistics on the labor market and rising inflation will increase pressure on Federal Reserve. Strong macroeconomic data from the United States will increase speculation about earlier curtailment of stimulus measures, which may again lead to higher yields of American trigeris and the dollar.
In the coming week, there will be little important news from the United States. The market is likely to be most interested in weekly data on initial applications for unemployment benefits. The main event of the week will be the ECB meeting.
Canada - Bank of Canada Meeting
Despite the decline in the dollar index last week, the Canadian currency could not significantly strengthen its position. The Canadian dollar remains vulnerable due to continued uncertainty about the prospects for the economy in the face of a new wave of rising COVID-19 incidence. Obviously, the economy still needs incentives, so the regulator is almost 100% likely to leave the main parameters of monetary policy unchanged.
The main attention of the market will be focused on the final press conference, at which the regulator can outline further plans for the implementation of monetary policy. Most likely, BoC will adhere to the soft tone of statements that could put pressure on the Canadian dollar.
EU - ECB meeting
The ECB also does not expect big surprises. The economy of the region continues to be under pressure from the pandemic, and the main economic indicators are still far from the forecast values. Therefore, the regulator is very likely to keep the main parameters of monetary policy unchanged.
Earlier, the head of the ECB said that the Eurozone economy remains in crisis and needs active monetary and fiscal stimulus. Comments by Lagarde and other ECB representatives indicate that at the final press conference, the regulator is likely to adhere to a soft tone of statements. In this situation, the European currency will be under pressure.
US - data on initial applications for unemployment benefits
Last week, data from the US Department of Labor on initial applications for unemployment benefits pleasantly surprised the market. The number of applications amounted to 576 thousand, which is the minimum value of the indicator after the outbreak of the crisis caused by the pandemic COVID-19. A further decrease in this indicator will indicate an improvement in the labor market. The market will receive another signal about the recovery of the US economy, and speculators have a strong argument that the Fed can change monetary policy earlier than announced.