.jpg)
Weekly Market Commentary
5th February 2012
Provided by TA Knowledge
Welcome to the Weekly Market Commentary from DGCX, providing you with a snapshot of what's happening in the energy, precious metal and currency futures markets.
The commentary and analysis included in the DGCX Weekly newsletter is provided by TA Knowledge, a leading UK-based provider of news and intelligence.
Please note that the observations and views expressed in this newsletter do not reflect the views of DGCX and are solely the view of the writer (TA Knowledge).
Economic Data Overview
The coming week will be dominated by the decisions of some of the world's most important central banks. The European Central Bank, the Bank of England and the Reserve Bank of Australia all meet. The tone for global interest rates was set two weeks ago when the Fed Chainman Ben Bernanke stated that it was the committee's desire to keep rates low until the end of 2014. Limited spending by households as they attempt to pay off debt and lack of credit facilities from banks as they try to strengthen asset ratios means that the emphasis will be on easier credit conditions also this week. The ECB meets on Thursday and while expectations remain that there will be another cut in rates to 0.75% from the current rate at 1.0%, this reduction is not expected to come until the March meeting. Since the liquidity injection in December by the ECB, bond spreads have dropped and liquidity pressures have eased as the bank fought to avert a credit crisis, and the next tender due in the end of February is a further factor that suggests the ECB will hold off on an immediate move to alter interest rates. The Bank of England also meets on Thursday and they are expected to continue quantitative easing by pumping £50 billion of liquidity into the market by asset repurchases. The Reserve Bank of Australia meets on Tuesday and the market is confident of a reduction of 0.25% in rates for 4.0%. This will be interesting to watch as Australia has been leading the global interest rate cycle with rate hikes before any other of the major economies and this week's potentially more dovish tone underpins the persistent requirement of softer rates worldwide. In terms of macro data, investors are looking for a slight moderation in inflation in China on Thursday to about 4% from 4.1% in December. This would be seen as positive by the market as it would give the Bank of China more scope to ease monetary policy and underpin growth in the economy... Read more
