INGOT Brokers Australia | This week's major market movers

This week's major market movers

Monetary policy committee (MPC) meeting is held eight times a year to decide and set the interest rate by a vote of the monetary policy members to reach their inflation target level.

Voting on a hike or cut the interest rate depends on the inflation report. Furthermore, the Bank of England also publishes quarterly inflation report to give market participants updates economic health and outlook of the U.K economy. Also, this report includes the latest forecast for inflation, factors which could influence policy decisions and output growth.

If the economic data such as unemployment rate, consumer price index, inflation, are positive policymakers may vote to hike interest rates. However, if these variables reflect a slowing down economy, then policymakers will leave interest rates unchanged.

On August 3rd at 07.00 ET, the BoE will announce its decision on interest rates. A market poll, by Reuters, was published showing that only 2 out of 80 experts expect the Central Bank to increase interest rates. However, ahead of the debate on whether to hike interest rates and borrowing costs for the first time in a decade mixed signals were given about the economy. The unemployment is at its lowest level in more than 40 years, and inflation is above the 2% target. However, wages are growing only weakly, and evidence for a big pick-up in investment and exports is provided with a mixed signal.

The US Non-Farm payrolls “NFP” data alongside the US employment report will be released the upcoming Friday, August 4th at 08.30 ET. Releases will also be made on Average Earnings.

The outlook of the US growth confidence is more likely to be slightly fading, regardless of the last month’s “NFP” positive report a strong reading is necessary to increase the confidence.

For short-term market direction, the increase in payrolls is crucial. The Federal Reserve policy is probably going to be limited if the data is in a 150,000 – 230,000 range, especially that the upcoming Employment report is before the September policy meeting.

September rate hike is expected if there is robust Employment Growth and a bounce in earnings.

One thing is for certain; volatility will be high around these dates. Thus, traders should be aware of margin levels and keep a close look on any updates that will influence these decisions and announcements.