Why the FOMC, BoJ, and EBA Will Drive Markets This Week



FOMC expected to do nothing but acknowledge strong data!

In terms of the major macro data release from the United States (VOO) (QQQ), it would be the FOMC (Federal Open Market Committee) monetary policy release on July 27, 2016. The FOMC is expected to hold the key rates unchanged at below 0.50%. The FOMC is expected to acknowledge the stronger-than-expected release after the Brexit referendum. Most of the data including the purchasing managers’ index, jobs, inflation, and real estate data have been better than market forecasts. The FOMC would also be careful not to close the door completely on the September rate hike, although the odds of a September rate hike is low.

BoJ to be the first major bank to come up with more easing measures

The BoJ (Bank of Japan) is expected to come out with an accommodative stance. Markets’ expectations have increased after Shinzo Abe’s recent election win. After his win, he said that Japan (DXJ) needs more monetary and fiscal stimulus. The BoJ is scheduled to come out with the policy on July 29. For more details on the recent election win and Shinzo Abe’s statement, read Theresa May and Shinzo Abe in Focus as FTSE 100 and Nikkei 225 Soar.

EBA stress test and IFO business climate

The week ahead only has two major data releases from the Eurozone (DBEU) (EZU). The releases are expected to have a major impact on the euro as well as the European indexes. The week kicks off with the German IFO business climate on July 25. It’s expected to be slightly below the previous months’ level as the Brexit vote dampened sentiments.

The other major data release for the week is on July 29. The European Bank Stress Test results will be published by the EBA (European Banking Authority). The results will have more of an impact than usual with the ongoing banking crisis in Italy.

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