A new month tends to bring new aspects to the world’s market. Last month, the main aspects for the market was about the escalating global trade conflict. This month, the volatility in the global markets may rise as new data and the news come to the market. Below are key things we can expect this month.
This month, central banks will meet to review their monetary policy. Already, some central banks such as Bank of Japan have already met and declared where they stand on monetary policy. BOJ has indicated that it will continue with the crisis-era policies for the foreseeable future. Still, the actions of the Bank of Japan will be of great importance this month. In the past one week, the bank has supported its bond market so traders will want to see its actions this month.
The Federal Reserve will be the first bank to meet this month. Traders will be waiting for an indication of whether the previous stand of the central bank will remain. Previously, the bank had pointed to two more rate hikes this year. They will also want to hear the Fed’s response to Donald Trump who has criticized its stands on interest rates.
The Fed will be followed by the Bank of England. In the previous meeting, the number of BOE officials supportive of an interest rates hike increased to three. During this meeting, traders will want to see whether the BOE will hike and if it doesn’t what the officials will say.
They will be followed by the RBA and RBNZ, which will release their interest rates decision on August 7th and 9th respectively.
Yesterday, there was an ease in the markets after it emerged that the US and China were restarting the talks on trade. This led the markets to soar as a sense of ease emerged. Already, the results of the trade war have been bad for all participants. In the US, consumers have been forced to pay higher prices and companies have slashed their estimates. In China, companies have announced plans to move their manufacturing to other South East Asian countries. However, overnight, the US changed its stand and announced that the country would place a 25% tariff on Chinese goods worth more than $200 billion.
Therefore, this issue will be at the forefront of all trading decisions this month. To punish the US, China – which has less exports to the US – will likely use non-tariff strategies like reducing or halting its debt to the US.
Politics in the US will continue to overheat as the mid-term election nears. During the month, the trial of former Trump campaign chairman, Paul Manafort will continue, which will lead to more revelations. In addition, the Mueller probe will continue and probably, Donald Trump will agree to sit down with him for an interview. Therefore, traders should carefully follow the developments.
This month, some of the US sanctions on Iran will start. On Monday, Donald Trump extended an olive branch to the Iranian leaders by saying that he was ready to meet them with no conditions. The leaders rejected the proposal for a meeting. They have threatened to block oil exports of other gulf state countries. This month, the issue of Iran will continue, which could lead to higher oil prices.
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