Week ahead – Fed Interest Rates, GDP

Week ahead – Fed Interest Rates, GDP

We have a relatively light data week ahead regarding the amount of significant data points coming out. However, the economic events are extremely significant in determining the state of their respective economies. Hope you all are staying safe. Here is your week ahead.

Fed Chairman Jerome Powell set to speak this week ahead

Tuesday, 26th January – United Kingdom’s Unemployment Rate

United Kingdom’s Coronavirus situation looks like it’s seeing the light at the end of the tunnel.  With Vaccinations fully underway, paired with strict lockdown measures, daily cases have fallen from their peak in early January.

However, that’s not to say they’re entirely out of the woods yet. The 7-day average continues to be at unsustainable levels, around 37,000. Furthermore, with a new Coronavirus strain proving as much as 1.5x more transmissible, the National Health Service struggles to cope. Soldiers have been dispatched to move patents and equipment around London hospitals, showing how overstretched the health system is in the United Kingdom.

The critical thing to note is that the UK’s Coronavirus situation is just starting to improve. They are nowhere near the stages of their economic environment improving. This should be considered when looking at the UK’s unemployment figures this week ahead, with analysts expecting quarterly unemployment figures to rise to 5.1%, up from 4.9% the quarter before. There is a high possibility that the unemployment rate is higher than this, and my prediction is that it will be given the state in the United Kingdom. We may see numbers up to 5.3% this week ahead.

Wednesday, 27th January – Australia’s CPI Figures

Source: Bloomberg

Australia continues to maintain a good grip on the Coronavirus after a devastating second wave in the middle of 2020. A decrease in rental income in inner cities alongside increased savings in many households has pushed restaurant and café prices higher, alongside commodities such as lumber to record highs. With interest rates at 0.1%, the RBA is having a difficult time spurring inflation. However, the Australian Bureau of Statistics predicts a rise in CPI by 0.3% due to the rise in childcare costs.

Wednesday, 27th January and Thursday 28th January – Federal Reserve’s Interest Rate Decision and United State GDP

A new President at the helm of the United States hasn’t deterred Federal Reserve Chairman Jerome Powell from the mandate of the Reserve Bank: Employment and Inflation. In the past couple of meetings, the central bank has reiterated that it is committed to using all the tools available to support the US Economy. Analysts are expecting the FOMC committee to leave rates as is, at 0.25%. Furthermore, Quarterly GDP figures for the US are set to be released this week ahead, with Bloomberg analysts predicting a 4.2% expansion in the last three months of 2020.

Friday, 29th January – Germany’s GDP Figures.

With Germany under lockdown till 14th February, a positive economic recovery coming shortly has all but vanished. The country did relatively well in halting the spread of the virus in the first wave – however, they have not been able to contain the second wave. Germany recently surpassed the grim milestone of 50,000 deaths, as many German citizens are refusing to self-isolate, prompting the German government to force them into detention centers.

With Germany in a dire state alongside a shortage in vaccines, Health Minister Jens Spahn told a local German Newspaper that the government had purchased a new antibody-based drug to fight the Coronavirus, costing the government over 400 Million euros for 200,000 doses.  Analysts had estimated a 4.4% growth in GDP – however, due to the second lockdown, there has been a Sharp revision downwards to an estimated 3% GDP growth.

A lighter week ahead. However, still an eventful one for sure.  Trade safe, and stay safe.

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