The main focus of last week was on the FOMC meeting on Thursday evening. Markets were looking to see if the Federal Reserve were going to move towards raising interest rates for the first time since 2008. However, disappointment was seen as the FOMC decided to keep rates on hold for the time being. Fed Chair Yellen’s statement was taken as dovish. Yellen cited that a stronger labour market and a further pick of inflation must be seen before possibly raising rates. Yellen went on to note that global growth is slowing which is being seen from China, this in-turn could see an impact on the economy of the US. Of the nine members of the FOMC only Jeffrey Lacker, Richmond Reserve Bank President voted for an increase from the current 0.25%. The probability of a rate rise to be seen this year now seems off the table with many speculators citing that we could see a hike in the first meeting of January 2016.
A quiet start to the week with no high-tier data released. However, from the US, Fed member Lockhart will be speaking later this afternoon whilst the existing home sales will be posted out of the States.
Continues the quiet start to the week with the UK releasing the public sector net borrowing figure in the morning.
Focus is on the Eurozone as manufacturing and service PMI’s are released in the morning from Germany and the Eurozone. These releases will be watched to see if the effects of China are starting to hamper the single currency zone. In the afternoon Draghi, the Head of the ECB speaks in Brussels on monetary policy before the European parliament’s economic and monetary committee. The market will decipher the rhetoric to see if the ECB are likely to increase QE or extend its current timeline past September 2016.
Firstly hitting the wires from Germany is the IFO Business Climate where we get an insight into how businesses see conditions in the coming six months. From the US core durable goods orders is posted with this gauge excluding transportation items. The consensus is that August figures will fall to 0.2%, this is half from July’s 0.4%.
The final reading of GDP for the second quarter is set to be seen from the US. With the second reading increasing to a bullish 3.7% this number is expected to remain in this final reading and if registered here or above will again give a great outlook for the US economy and also boost the Greenback.