Key Points From This Week

Joe Biden Sworn In

The democrat leader was sworn in as the 46th president of the United States this week. Biden used the event to call for unity in the face of growing political divisions in the US, highlighted by the recent violence at Capitol Hill. Despite fears over the threat of further violence, the event passed off peacefully amidst a heavy security presence. Biden set to work straight away using executive orders to reverse a number of Trump’s key policies.

BOC Remains On Hold

The BOC held rates unchanged this week, despite expectations of a micro-cut. However, the BOC was clear in warning that the outlook remains highly precarious with a great deal of uncertainty around the pandemic. The bank now sees inflation remaining below target until 2023, a year later than first projected, meaning that rates will remain on hold until such time also.

BOJ Remains On Hold

The BOJ held rates on hold this week amidst a fresh state of emergency being announced in parts of the country, including Tokyo and Osaka. While the current fiscal year is now forecast to see GDP shrink by 5.6% vs 5.5% initially, the bank expects growth to rebound quicker than first projected over next year as the economy rebounds in the wake of the pandemic.

ECB Remains On Hold

The ECB held rates on hold this week also, though reaffirmed its message of being ready to do more if necessary. The bank once again highlighted the downside risks and uncertainty around the pandemic, despite the start of vaccinations, and said that it was monitoring recessionary risks within the eurozone amidst ongoing lockdowns.

Key Events Next Week

Australian CPI

Aussie CPI data next week will be a key focus point for antipodean traders. The domestic economy has seen a bounce back recently, despite ongoing lockdowns in some areas. However, the RBA has been keen to stress that the recovery will not be linear and that plenty of downside risks and uncertainty remains due to the pandemic.

January FOMC

The headline event next week will be the January FOMC meeting. The Fed is not expected to announce any further actions given the expectations around forthcoming US fiscal stimulus. Traders will be keen to receive the Fed’s latest assessment I light of the change in US administration with special attention on how the Fed thinks the new administration will impact the economy.

Keep An Eye On

Vaccine News

There have been some concerns highlighted recently around supply disruptions, especially in the UK and Europe. If vaccine disruptions continue, this will start to negatively impact government targets and time lines and could weigh on risk appetite.

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