8th – 12th March 2021 Fundamental Updates & Latest Central Bank Cliff notes

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VIX: $24.66 5/3/21 

Important fundamental releases: 8th to 12th March 2021

  • 08:30 am Wed 10th Mar USD CPI 
  • 10:00 am Wed 10th Mar CAD Interest Rates 
  • 07:45 am Thur 11th Mar EUR Interest Rates 
  • 08:30 am Fri 12th Mar CAD Employment  

Latest Central Bank statements:

USD FOMC: 27th 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.
  • Bank is watching CPI numbers to stay between the 1-3% 

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 February 2021

  • Will continue their QE program until confident that consumer price inflation will be sustained at the 2% per annum target. 
  • Inflation and employment expected to stay below targets over the medium term in the absence of prolonged monetary stimulus. 
  • Leave interest rates at current level .25%

AUD: RB Of Australia 2nd March 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.
  • CPI inflation is expected to rise temporarily because of the reversal of some COVID-19-related price reductions.
  • The outlook for the global economy has improved over recent months due to the ongoing rollout of vaccines.  

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