Bloomberg are calling this week the 'World Economy's Biggest Week of 2019' and who are we to argue! It's an absolutely packed calendar of major risk events with central bank meetings aplenty, including the first rate cut from the Federal Reserve in more than a decade, plus ongoing trade talks and the monthly US jobs report.
The main highlight is the FOMC meeting which ends on Wednesday and culminates in a 1800 GMT statement followed by Chair Powell’s press conference. There will be no forecasts or dot plots until the September FOMC. We will publish a detailed preview of the meeting tomorrow.
As always, the first Friday of the month is US non-farm payrolls day. If estimates are fairly close to their mark, then the impact on the Fed going forward will be small, albeit not in favour of increased easing.
We also get two other central bank meetings, though in truth, not a great amount is expected from them. Unchanged policy is expected from the Bank of Japan on Tuesday and forward guidance will probably remain unchanged with a pledge that the BoJ “intends to maintain the current extremely low levels of short and long-term interest rates for an extended period of time, at least through around spring 2020.” New forecasts will be published, but these are unlikely to materially deviate from the previous ones.
Much depends on the yen as falling US rates and continued global growth concerns could accelarate gains in Japan's currency, forcing policymakers to consider more easing measures in response to dovish moves in other major economies. That said, unless USD/JPY pushes much lower to say 105, even then we are only likely to see "verbal" policy support from the BoJ, or at most, some change to the formal wording of their forward guidance.
The Bank of England meets on Thursday alongside fresh forecasts in its latest quarterly inflation report. No change is expected with markets pricing roughly 50% odds of a rate cut after the October 31st Brexit deadline.
Here's what to look out for on the calendar across global markets next week:
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