Markets.com Logo
euEnglish
LoginSign Up

Week Ahead: FOMC minutes to confirm Fed policy rethink?

Jul 4, 2021
7 min read
Table of Contents

    It’s a busy week for central banks this week. Firstly, we start with the FOMC’s meeting minutes from its June policy talks. Tapering was on the agenda, whilst policymakers started to pull forward when they think rates should rise, so getting beneath their skin is critical for understanding market movement.

    The Reserve Bank of Australia shares its latest update too as rising Covid cases and lockdowns kick in. Will this inspire a policy rethink?

    The impact of the delta variant on Eurozone recovery will be in focus too as the EU shares its latest economic outlook.

    FOMC meeting minutes are the week’s big release, coming on Wednesday.  

    It will be interesting to see in the Fed’s internal discussions after June’s meeting. Then, the Fed signalled it won’t let inflation run hot and that a rate hike may be coming a little earlier than anticipated. 

    The Fed’s median projection showed they see lifting their benchmark rate to 0.6% from near zero by the end of 2023. In March, it was expected that rates would hold steady across that year. 

    Tapering was also on the agenda. We know Chairman Powell et al discussed an eventual reduction in the Fed’s bond buying programme, but, in the post-meeting statement, no indicators towards when this might occur were given.  

    The Fed is still making around $120bn in purchases every month as part of its overall Covid economy strategy.  

    A window into any central bank’s thinking is essential for market observers. Investors are having to recalibrate their high-inflation bets in response to the Fed’s hawkish June tilt.  

    What we’re seeing now is a US economy in a transitionary phase. No economy, no matter how large, can afford to simply ride the waves. It has to be responsive. The Fed has done that, but it will be interesting to see inside the Fed at this crucial juncture. 

    Keeping with central banks, the Reserve Bank of Australia speaks on Wednesday. Covid-19, in a country that largely appeared to have it under control, is starting to bite once more. The delta variant has begun its spread throughout Australia. A new wave of lockdowns is in place. 

    Roughly 80% of Australia’s population is back under stay-at-home orders or restricted movement. 

    Could this prompt a change in RBA thinking ahead of its July 6th meeting? Governor Lowe and his team are already in a dovish economic stance. Rates have not shifted from their historic 0.10% level since November. 

    Speaking after last month’s meeting, Governor Lowe said: “The economic recovery in Australia is stronger than earlier expected and is forecast to continue. The bank’s central scenario is for GDP to grow by 4.75% over this year and 3.5% over 2022. This outlook is supported by fiscal measures and very accommodative financial conditions.”  

    Of course, that statement was made when the road to recovery hadn’t been blocked. The RBA will need to act with clarity and precision to ensure it can keep Australia’s economy on the right track. We’ll learn more when the RBA speaks on Wednesday. 

    EU economic forecasts are coming this week, too.  

    The bloc appears to be coming out of the worst of the pandemic relatively strongly. We’ve seen strong PMI numbers and GDP forecasts are strong too. We’ve also seen some European Central Bank members suggest pulling back of the PEPP stimulus package could be on the cards. 

    Regarding PEPP, ECB council member and Deutsche Bundesbank President Jens Weidmann has suggested the programme could be wound up prior to the original March 2022 deadline. The ECB will have pumped €2.2 trillion into the Eurozone economy through its PEPP programme by then. However, to change this would require strong economic recovery and complete removal of Covid-caused restrictions. 

    With the delta variant beginning to bite, full removal of restrictions seems unlikely. In fact, how the EU responds to the new wave of cases will be crucial. Will it have to retool thinking and economic forecasts in response? 

    Still, the analysts’ outlook is broadly positive. S&P Global, for instance, has made a few tweaks. 

    “We revised upward our forecast for eurozone growth to 4.4% this year and 4.5% in 2022, seeing broader implementation of fiscal stimulus under the Next Generation EU plan and weaker contraction of GDP in the first quarter,” the ratings house said. 

    “Long-term scarring to the economy is likely to be limited by Europe’s coordinated fiscal and monetary policy response, paving the way for the output gap to close by 2024.” 

    Major economic data 

    Date  Time (GMT+1)  Asset  Event 
    Mon 05-Jul  3.30pm  CAD  BOC Business Outlook Survey 
               
    Tue 06-Jul  5.30am  AUD  RBA Rate Statement 
       5.30am  AUD  Cash Rate 
       10.00am  EUR  EU Economic Forecasts 
       10.00am  EUR  ZEW Economic Sentiment 
       10.00am  EUR  German ZEW Economic Sentiment 
       3.00pm  USD  ISM Services PMI 
               
    Wed 07-Jul  3.00pm  CAD  IVEY PMI 
       3.00pm  USD  JOLTS Job Openings 
       7.00pm  USD  FOMC Meeting Minutes 
               
    Thu 08-Jul  2.30am  AUD  Retail Sales m/m 
       1.30pm  USD  Unemployment Claims 
       3.30pm  GAS  US Natural Gas Inventories 
       4.00pm  OIL  US Crude Oil Inventories 
               
    Fri 09-Jul  1.30pm  CAD  Employment Change 
       1.30pm  CAD  Unemployment Rate 

     

    Key earnings data 

    Date  Company  Event 
    Tue 06-Jul  Ocadao Group  Q2 2021 Earnings 
            
    Wed 07-Jul  Aeon  Q1 2021 Earnings 
            
    Thu 08-Jul  Levi’s  Q2 2021 Earnings 
            
    Fri 09-Jul  Tryg  Q2 2021 Earnings 

    Risk Warning: this article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform.When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice. Trading cryptocurrency CFDs and spread bets is restricted for all UK retail clients. 

    Written by
    SHARE

    Markets

    • Palladium - Cash

      chartpng

      --

      -1.17%
    • EUR/USD

      chartpng

      --

      -0.12%
    • Cotton

      chartpng

      --

      -0.74%
    • AUD/USD

      chartpng

      --

      -0.49%
    • Santander

      chartpng

      --

      0.16%
    • Apple.svg

      Apple

      chartpng

      --

      -0.02%
    • easyJet

      chartpng

      --

      -0.54%
    • VIXX

      chartpng

      --

      -0.28%
    • Silver

      chartpng

      --

      -2.40%
    Table of Contents

      Related Articles

      ECB Rate Cut Expectations Revised Amid Economic Resilience

      Following the ECB's decision to hold interest rates steady, Goldman Sachs and JPMorgan Chase revised their expectations for future rate cuts, considering the economic resilience and potential developments in EU-US trade relations.

      Liam James|1 day ago

      Hedge Funds Advise Buying Protection Against Potential Stock Market Downturn

      As U.S. stock markets soar to record highs, firms like Goldman Sachs and Citadel are advising clients to buy relatively inexpensive hedges to protect against potential losses due to a confluence of risks.

      Ava Grace|1 day ago

      Federal Funds Rate vs. SOFR: Liquidity Measurement Debate in US Financial System

      As excess cash in the US financial system shrinks, calls grow to reassess how to measure liquidity tightness and which benchmarks the Fed should target.

      Liam James|1 day ago
      Markets.com Logo
      google playapp storeweb tradertradingView

      Contact Us

      support@markets.com+12845680155

      Markets

      • Forex
      • Shares
      • Commodities
      • Indices
      • Crypto
      • ETFs
      • Bonds

      Trading

      • Trading Tools
      • Platform
      • Web Platform
      • App
      • TradingView
      • MT4
      • MT5
      • CFD Trading
      • CFD Asset List
      • Trading Info
      • Trading Conditions
      • Trading Hours
      • Trading Calculators
      • Economic Calendar

      Learn

      • News
      • Trading Basics
      • Glossary
      • Webinars
      • Traders' Clinic
      • Education Centre

      About

      • Why markets.com
      • Global Offering
      • Our Group
      • Careers
      • FAQs
      • Legal Pack
      • Safety Online
      • Complaints
      • Contact Support
      • Help Centre
      • Sitemap
      • Cookie Disclosure
      • Awards and Media

      Promo

      • Gold Festival
      • Crypto Trading
      • marketsClub
      • Welcome Bonus
      • Loyal Bonus
      • Referral Bonus

      Partnership

      • Affiliation
      • IB

      Follow us on

      • Facebook
      • Instagram
      • Twitter
      • Youtube
      • Linkedin
      • Threads
      • Tiktok

      Listed on

      • 2023 Best Trading Platform Middle East - International Business Magazine
      • 2023 Best Trading Conditions Broker - Forexing.com
      • 2023 Most Trusted Forex Broker - Forexing.com
      • 2023 Most Transparent Broker - AllForexBonus.com
      • 2024 Best Broker for Beginners, United Kingdom - Global Brands Magazine
      • 2024 Best MT4 & MT5 Trading Platform Europe - Brands Review Magazine
      • 2024 Top Research and Education Resources Asia - Global Business and Finance Magazine
      • 2024 Leading CFD Broker Africa - Brands Review Magazine
      • 2024 Best Broker For Beginners LATAM - Global Business and Finance Magazine
      • 2024 Best Mobile Trading App MENA - Brands Review Magazine
      • 2024 Best Outstanding Value Brokerage MENA - Global Business and Finance Magazine
      • 2024 Best Broker for Customer Service MENA - Global Business and Finance Magazine
      LegalLegal PackCookie DisclosureSafety Online

      Payment
      Methods

      mastercardvisanetellerskrillwire transferzotapay
      The www.markets.com/za/ site is operated by Markets South Africa (Pty) Ltd which is a regulated by the FSCA under license no. 46860 and licensed to operate as an Over The Counter Derivatives Provider (ODP) in terms of the Financial Markets Act no.19 of 2012. Markets South Africa (Pty) Ltd is located at BOUNDARY PLACE 18 RIVONIA ROAD, ILLOVO SANDTON, JOHANNESBURG, GAUTENG, 2196, South Africa. 

      High Risk Investment Warning: Trading Foreign Exchange (Forex) and Contracts For Difference (CFDs) is highly speculative, carries a high level of risk and is not appropriate for every investor. You may sustain a loss of some or all of your invested capital, therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin. Please read the full  Risk Disclosure Statement which gives you a more detailed explanation of the risks involved.

      For privacy and data protection related complaints please contact us at privacy@markets.com. Please read our PRIVACY POLICY STATEMENT for more information on handling of personal data.

      Markets.com operates through the following subsidiaries:

      Safecap Investments Limited, which is regulated by the Cyprus Securities and Exchange Commission (“CySEC”) under license no. 092/08. Safecap is incorporated in the Republic of Cyprus under company number ΗΕ186196.

      Markets International Limited is registered  in the Saint Vincent and The Grenadines (“SVG”) under the revised Laws of Saint Vincent and The Grenadines 2009, with registration number  27030 BC 2023.

      Close
      Close

      set cookie

      set cookie

      We use cookies to do things like offer live chat support and show you content we think you’ll be interested in. If you’re happy with the use of cookies by markets.com, click accept.