March 12, 2021 | by sandeep
5 Issues to Look Out for This Week – 15/3/21
By Mateo Jarrin Cuvi
This week is all about monetary policy statements from some of the most important central banks in the world. Find out what you should be paying attention to these days!
Biden’s Economic Stimulus Package = Shop Till You Drop!
January was an exceptional month for US retail sales. It seems like everyone hit the malls to escape cabin fever and appease their consumerist bug.
Thanks to the Biden administration’s stimulus package, which stuffed money in buyers’ pockets, consumption grew by a staggering 5.3% following a December marked by a 1% decline in retail sales.
This came as a shock to analysts who had predicted a growth of only 1.2% for the month.
Overall, sales increased across the board for the US economy at the start of 2021. Automobile sales grew by 3.1%, clothing by 5%, food and beverages by 6.9%, electronics by 14.7% and furniture by 12%.
Retail sales are expected to continue on this upward trajectory as families receive an additional $1,400 as part of the government’s stimulus policies.
Furthermore, as more Americans receive the COVID-19 vaccine and brave the outside world, restaurants, bars and cafes will see an additional upsurge in sales.
Will we see more of the same in February or will the economy somehow slow down?
Find out on Tuesday, March 16th at 12:30 pm GMT when the US Census Bureau releases its latest retail sales figures.
Whatever happens, the USD is bound to move, so get those trades ready!
When the US Federal Reserve Speaks, We All Listen
The US Fed will speak this week, so you better pay close attention!
Will interest rates remain unchanged? Will there be any other monetary policy decision that is likely to significantly shift the price of the US dollar?
During the last FOMC announcement, the USA’s monetary policy was left untouched.
Interest rates were kept at their current level, while the government confirmed that it would continue to buy bonds to the tune of US$120 billion per month in an effort to stymie the economic crisis wrought on the country by the pandemic.
Analysts suggest the Fed remains confident with the current situation and will stay on course during this week’s meeting.
According to ING, the Fed believes “there is significant spare capacity in the economy that will continue to dampen price pressures while there continue to be uncertainties over the resilience of the recovery.”
Economists with Wells Fargo agree, saying that “it is more or less unfathomable to think that the FOMC will hike rates at its March meeting, and a reduction in the monthly pace of asset purchases (currently $80 billion of Treasury securities and $40 billion in mortgage-backed securities) is also not likely.”
Tune in for the FOMC’s statement on Wednesday, March 17th at 6:00 pm GMT to find out and get ready to trade USD based on what’s delivered.
14% GDP Growth for Q3 Ain’t Too Shabby, New Zealand
New Zealand had a stellar Q3 with its GDP growing by an impressive 14% following a terrible Q2 due to the COVID-19 pandemic.
According to Stats NZ Tatauranga Aotearoa, the country’s main data repository, this growth marked “the largest quarterly increase in GDP on record,” although it wasn’t enough to push overall GDP into the positive as it settled at -2.2% for the year.
This growth was spurred by New Zealand’s effective and ultra-strict policy aimed at handling COVID-19, one that allowed the country’s economy to resume activity more quickly.
For Q3, the retail, restaurant and accommodation sector grew by 42.8%, while the arts and recreation sector experienced a 26.8% rate of growth.
Does this upward momentum bode well for Q4?
Check in on the country’s latest GDP figure to be released on Wednesday, March 17th at 9:45 pm GMT.
This is a prime opportunity to trade NZD, one of FXPRIMUS’ favorite currencies!
Can the GBP Be Derailed Following a Stellar Start to 2021?
GBP has been one of the world’s best performing currencies during the first two months of this year thanks to the UK’s effective vaccination policy.
Matthew Hornback, who heads Morgan Stanley’s Macro Strategy, believes “much of the optimism around the UK’s rapid vaccination rates and resultant re-opening strategy is now in the price for GBP.”
Will the Bank of England’s (BOE) statement on Thursday, March 18th at 12:00 pm GMT on interest rates and monetary policy slow down GBP’s scorching hot start for 2021?
During its previous statement, the BOE opted “to keep the key interest rate at 0.1% and the total bond-purchase target at 895 billion pounds ($1.2 trillion).”
This time around many analysts expect the BOE to send a signal or two on potential interest rate hikes down the road as the global economy recovers and inflation creeps upwards.
So tune in to the announcement later today and have those GBP trades ready to go!
Recovery in Sight or Dead Cat Bouncing for the Tech World?
Following a downturn for NASDAQ and stocks such as Tesla’s, things seem to be once again looking up for the tech world.
For example, Tesla’s stock rose by almost 20% alone last Tuesday.
But ask yourself: Is this sign of a true recovery or just a dead cat bouncing in a choppy market?
Some analysts suggest a rebound is well in sight, while others believe value (non-tech) stocks will outperform all others and are the way to go in the short term.
On the one hand, Michael Sheldon, CIO at RDM Financial, told Reuters, “Tech stocks are overdue for some kind of bounce after the downfall they have had so far with most investors maintaining a positive outlook on tech stocks in the medium to longer term.”
On the flipside, speaking to CNBC, Wharton Business Professor Jeremy Siegel claimed, “The so-called value stocks are going to be sought out for their yield because I think interest rates are still going to be headed much higher here on the long bond.”
This is one rollercoaster ride you shouldn’t miss out on, so keep an eye out for this week’s market news, pick a solid position and trade tech stocks and tech-heavy indices such as NASDAQ.
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*Any opinions, news, research, analyses, prices or other information contained here are provided as general market commentary and do not constitute investment advice. FXPRIMUS does not accept liability for any loss or damage, including without limitation to, any loss of proﬁt, which may arise directly or indirectly from the use of or reliance on such information.