Investors seem to have been encouraged by last week’s rise in US retail sales despite the spread of the coronavirus Delta variant and China’s housing crisis. US Treasuries and the US dollar rose. This week, traders will likely focus on the Fed Chairman’s speech on Friday for clues as to whether tapering measures will be put into place. The speech will come after the Fed’s interest rate decision, and it could reveal the direction the Fed and the US economy will take in the coming months.
Yesterday, Sunday, Janet Yellen, US Treasury Secretary, warned of a possible “economic catastrophe” if action is not taken regarding the federal debt ceiling. In a Wall Street Journal opinion piece, Yellen said that, if not remedied, the debt default could ‘permanently’ weaken America.
INTEREST RATES & FOREX
The U.S. is not the only country that will publish its monetary policy decision this week. Sweden’s Riksbank (Tuesday), Japan’s central bank (Wednesday), Swiss National Bank, Norway’s Norges Bank, and the Bank of England (Thursday) will also have their interest rate decisions published this week.
Due to these announcements, the US dollar (USD), the South African rand (RAD), the Swedish krona (SEK), the Norwegian krone (NOK), the Japanese yen (JPY), the Swiss franc (CHF), and the pound sterling (GBP) could be on the investors’ watch list.
Britain’s sterling is in the spotlight after last week’s UK retail sales fell to a 1996 low. The figures have fallen for four consecutive months.
The euro will also remain in the spotlight this week. On Monday, Spain and Germany will release their trade balance data. The figures will reveal the imports and exports of both countries.
OIL AND METALS
West Texas Intermediate oil reached $72.17 a barrel while Brent, the North Sea crude, reached $75.33 on Friday. Despite rising above $70 a barrel, the oil prices eventually fell on the same day, Friday. The EIA United States Crude Oil Stocks Change data is scheduled to be released on Wednesday. The figure is likely to affect oil prices.
After five consecutive sessions of gains, the US crude oil reached its highest levels since early August and Brent its highest levels since late July. Hurricanes Nicholas and Ida affected oil production in the Gulf of Mexico, which is probably why oil prices fell on Friday.
Metals continued to fall. Silver hit its lowest level since 2020, gold hit its lowest price in 5 weeks while platinum plunged 2.5%.
CRYPTO MARKET NEWS
Throughout last week, cryptocurrencies saw moments of gains with Bitcoin reaching as high as $48,000 and Ether climbing up to $3,400. The weekend left crypto assets with losses. Bitcoin, the largest cryptocurrency by market capitalization, fell to $45,500 and, its counterpart, Ether, followed in losses.
Economic Highlights for the Week:
Monday
- Business NZ New Zealand Services Index
- Germany Producer Price Index (PPI) m/m
- Spain Trade Balance
Tuesday
- Sveriges Riksbank Interest Rate Decision
- United States Building Permits
- Switzerland Trade Balance
Wednesday
- Bank of Japan (BoJ) Interest Rate Decision and Press Conference
- The United States Existing Home Sales
- The EIA United States Crude Oil Stocks Change
- Federal Reserve System (Fed) Interest Rate Decision
- Bank of England (BoE) Deputy Governor for Prudential Regulation Woods Speech
Thursday
- Swiss National Bank (SNB) Interest Rate Decision
- Norges Bank Press Conference and Rate Decision
- Bank of England (BoE) Interest Rate Decision
- Canada Retail Sales m/m
- South African Reserve Bank Interest Rate Decision
Friday
- Ifo Germany Business Climate
- The United States New Home Sales
- Federal Reserve System (Fed) Chair Powell Speech