Markets were somewhat taken by surprise last week when, despite Mark Carney seemingly doing his best efforts to guide the market for a rate cut, there was no such thing. There may now be further rumblings of the unreliability of central bank forward guidance and the “unreliable boyfriend” accusations will re-surface, however that should not change the expectation that there will be some significant move from the Bank of England to combat the impact of Brexit in the coming meetings. Bank of England Chief Economist, Andy Haldane (who is admittedly very dovish, even though he did not vote for a rate cut at the July meeting) has re-iterated the likelihood for material easing. This could mean added focus on UK inflation and retail sales this week which could again impact sterling which retains high volatility, whilst the ECB will be another of the key drivers. Other markets are likely to run off sterling, with Brexit still a key aspect for traders. Beyond that the European Central Bank has its monetary policy meeting and will need to decide whether to hold fire (similar to the Bank of England) to wait and see, and just use Mario Draghi’s jawboning instead. Again there is likely to be volatility on the euro as a result this week.
We take a look at the key economic drivers impacting the markets in the coming week. What is the outlook for forex markets which continue to see key moves for sterling (following Brexit) and the Japanese yen (in front of the Bank of Japan at the end of the month. Also will there be some interesting moves on the Kiwi this week? We undertake a technical analysis of EUR/USD and GBP/USD. We take a look at the outlook for equity markets with earnings season ramping up on Wall Street. Also how are the key European markets set up for the key drivers this week? There is a technical analysis of the DAX and FTSE 100. We finish with a look at the key commodities markets with some interesting times for precious metals, and oil, whilst doing a technical analysis of gold and Brent Crude oil.