Markets were pushed and pulled on risk sentiment this week as the slowdown in the vaccine roll out reduced optimism of a return to global growth. However, the main focus for the week was the Federal Reserve interest rate decision midweek. The Fed stressed the recent slow down in growth prospects, but otherwise reassured markets that financial accommodation (low interest rates and QE) would remain in place. This means any deeper falls lower in equities should find dip buyers. In other news the companies GameStop, Nokia, Blackberry, and AMC all saw spectacular gains this week as the retail driven reddit community wallstreetbets bought call options in huge volumes. What a week!

Other key events from the past week

  • AUD: CPI data, Jan 27. Australia’s CPI data did print higher this week, but the AUD continued to lose ground against the NZD as the RBNZ is expected to pull-back from negative interest rates. AUDNZD saw strong selling.
  • USD: Interest Rate Statement, Jan 27. Interest rates were unchanged, but key focus was on the speed of bond tapering. The Fed’s message was that no bond tapering was expected any time soon and this supported silver and gold buyers.
  • EUR: ECB to cut rates? Jan 27. ECB‘s Knot said the ECB has the tools necessary to combat EURUSD gains. The EUR saw some selling as Knot explained the ECB had room to ‘lower rates further’. EURUSD fell sharply on this headline.

Key events for the coming week

  • AUD: Interest Rate Statement, Feb 02. Australia’s interest rates are likely to stay at 0.10% for the foreseeable future, but investors will look for any clues as to when the RBA will start thinking of hiking as the AUD economy improves.
  • GBP: Interest Rate Statement, Feb 04. Interest rates are expected to be un-changed. However, with the Bank of England walking back from negative interest rates will they confirm that stance this week and send the GBP higher?
  • USD: Employment data? Feb 05. Will the US employment data this week con-firm the expected US economic recover?