15th – 19th Feb 2021 Fundamental Updates & Latest Central Bank Cliff notes

VIX: $20.87 5/2/21

Important fundamental releases: 15th to 19th February

Latest Central Bank statements:

USD FOMC: 27^th January 2021

Economic activity and employment has been rising at a moderate rate. Job gains have been solid. Unemployment rate has remained low.
Household spending has been rising at a moderate pace, business fixed investment and exports remain weak.
IR: Maintain current rate 0 to 0.25%. Will maintain target range until labor market conditions have reached levels consistent with the committee’s assessments of maximum employment and inflation has risen to 2% and are on track to exceed it.

CAD Bank of Canada Jan 20th 2020

Canada’s economy had strong momentum through to late 2020, but the resurgence of cases and the reintroduction of lockdown measures are a serious setback.
“First quarter of 2021 is expected to be negative. Assuming restrictions are lifted later in the first quarter, the Bank expects a strong second-quarter rebound”.
Stronger demand is pushing up prices for most commodities, including oil. (Bullish(strength) for the currency)
Interest Rates: Bank of Canada will maintain its Interest Rate target 0.25%. Will continue their QE
A broad-based decline in the US exchange rate combined with stronger commodity prices have led to a further appreciation of the Canadian dollar.

CHF Swiss National Bank: September 2020

GDP expects to stay below pre covid crisis level, shrink 5% since the start of the crisis.
Inflation: Inflation rate is (-0.6%) expected to edge back to positive. They are paying attention to inflation rate
IR: Keeping interest rate at -.075%
Willing to intervene more strongly in the foreign exchange market.

GBP Bank of England Feb 4th 2021

Inflation target at 2%
CPI inflation is expected to rise sharply towards the 2% target in the spring.
- If outlook for inflation weakens, the committee stands ready to take whatever additional action is necessary to achieve its remit.
- No intention of tightening monetary policy at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably.
Will maintain bank rate at 0.10%
Will continue their version of QE
- Maintaining a target for government bond purchases at £875 Billion
Signs that consumer spending has softened across a range of indicators & investment intentions have remained weak.
Household spending expected to pick up in 2021 Q1 as covid restrictions loosen.
Q4 2020 GDP stronger than expected. Outlook of the economy remains unusually uncertain. Depends on the evolution of the pandemic.

JPY Bank of Japan Jan 21st, 2020

Decided to follow yield curve control
- Interest rates will remain at -0.10%
- Will purchase a necessary amount of Japanese government bonds (JGBs) without setting an upper limit so that 10-year JGB yields will remain at around 0%.
WIll continue their version of QE (buying Japanese government bonds) for another 6 months until September 2021.
The Bank will be monitoring if the CPI exceeds 2% and stays above the target in a stable manner.

EUR ECB Dec 10th, 2020

Will maintain Interest rates at 0.00%
- Will remain at this level until the Governing council sees inflation outlook get close to but below 2% within their projections.
Increase their PEPP by 500 Billion Euros
- Will extend this program until March 2022 and/or it determines that the coronavirus crisis phase is over.
- Inflation goal of 2% ceiling. Will keep interest rates unchanged at 0.00%, 0.25% and -0.50% respectively. ECB will continue its PEPP – Pandemic emergency Purchase programme. Asset purchase program will continue at 20billion euro per month. Will end shortly before increasing interest rates*

NZD: RBNZ November 2020

Employment : maximum sustainable employment

Will continue their QE program for a long time, and prepared to give more support
Restrict high risk lending in housing market
Leave interest rates at current level .25%
Keep inflation between 1% & 3%

AUD: RB Of Australia 2nd Feb 2021

Will maintain interest rates at .10%.
- Will not increase the cash rate until actual inflation is sustainably within the 2% to 3% target range.
  - Key factor being employment.
Will continue their QE
- Decided to purchase an additional $100 Billion of bonds issued by the Government at $5 Billion per week.
Inflation remains low and below central bank targets.
Economic recovery is well under way and has been stronger than expected.
Unemployment rate dropped and retail spending strong.
GDP expected to be at end of 2019 levels by mid 2021.