Weekly Market Outlook RBA, BOC & ECB in focus

It’s a big week ahead with central bank announcements from the Reserve Bank of Australia on Tuesday, the Bank of Canada on Wednesday and the European Central Bank on Thursday. As the Fed has announced plans to start tapering Covid stimulus measures, all eyes are now on which central bank will be next.

The rest of the week is relatively light on the economic data front with Friday’s Canada Unemployment Rate the next big focus. However, with the start of a new month and a run to the end of the year, all eyes will be on stock market indices which have been surging higher in recent months.

You can learn more about some of the global themes affecting the markets in this selection of new education articles.

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Weekly Forex Calendar

Source: Forex Calendar from the MetaTrader 5 trading platform provided by Admirals.  

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Trader’s Radar – ECB Press Conference

On Thursday 9 September, the European Central Bank releases its latest monetary policy report at 12.45 pm BST which will be followed by a press conference at 1.30 pm BST. It will be widely watched this week as rumours have been circulating stating the central bank could start to taper as early as December.

While some policymakers have tried to down play the prospects of tapering, the market is preparing for a big shift in policy stance. This has been evident from the rise in the euro over the past few weeks, especially against the US dollar.

Source: Admirals MetaTrader 5, EURUSD, Monthly – Data range: from Aug 1, 2013, to Sep 3 2021. Performed on Sep 3 2021, at 7:00 am GMT. Please note: Past performance is not a reliable indicator of future results.

The monthly price chart of EURUSD above shows the recent wedge formation that has developed. The series of lower highs and higher lows between the descending and ascending black lines.

The price has tried to break through the bottom in recent weeks but has failed as buyers pushed the currency pair back inside of the wedge formation. A shift in policy stance from the ECB could see buyers attempt a push back to the top of the wedge formation so it’s one to watch.

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Corporate Trading Updates and Stock Indices

The TINA trade continues to remain alive in global stock market indices. The fact that ‘There Is No Alternative’ continues to underpin demand for stocks – especially in the United States and in the technology sector.

European stock market indices have underperformed their American counterparts, and Asia stock market indices have underperformed to an even greater extent. Seasonally, stock markets are entering a bearish period before the Santa Claus rally at the end of the year.

Source: Admiral Markets MetaTrader 5, SP500, Daily – Data range: from Dec 7, 2020, to Sep 3, 2021, performed on Sep 3, 2021, at 6:30 pm GMT. Please note: Past performance is not a reliable indicator of future results. 

Past five-year performance of the S&P 500:

• 2020 = +16.17%
• 2019 = +29.09%
• 2018 = -5.96%
• 2017 = +19.08%
• 2016 = +8.80

In the daily chart of the S&P 500 stock market index above, the uptrend remains intact. The price has bounced off the moving averages several times this year underpinning the strength of the US stock market.

These levels continue to remain as zones for potential turning points and confirmation that the trend is still up. While some analysts are calling for a deeper correction before year-end, it’s important to trade what we see.

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