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After the Fed’s turn in the spotlight last week, the Bank of England steps up to the plate on Thursday.

US: do not underestimate impact of Fed meeting

There are no big statistics to be announced this week for the US, the only real noticeable figures include the Flash Manufacturing and services PMIs on Wednesday, but do not underestimate the impact last week’s Fed meeting will have on Monday’s open.

The Fed might have decided to keep its benchmark interest rate close to zero, but with current inflation rates sitting at 5%, and many experts of the opinion real inflation actually sits at over 10%, the decision to leave interest rate increases till 2023 could be costly in the short term.

US markets only took a slight hit in reaction to the news on Wednesday evening, but with a week to digest the news, the US Monday bell might be a volatile one, with the Dow and S&P possibly breaking out in either direction.

The other thing to watch out for next week is Fed chair Powell’s testimony on Tuesday.

UK

This week is an important one for the UK in general. On Thursday we will see how the Bank of England plans to deal with the current inflation crisis.

All eyes will be on whether the MPC choose to follow suit with the Fed’s decision on Wednesday to keep interest rates close to 0, or if they will be the first to make a stand against inflation and raise current interest rates.

The more likely scenario we will see is the MPC leave interest rates alone, in the hope inflation will slowly decrease over the coming months, as the alternative (raising interest rates) could have catastrophic repercussions countrywide.

On Monday we also see what should have been the day England finally removed all Covid lockdown restrictions, but with the date being pushed back four weeks to July 19th, it is highly possible we will see a bearish reaction from the FTSE.

The UK will also release their Manufacturing and Services PMIs on Wednesday, and CBI realised sales on Friday.

Eurozone

Similar figures will be released in the Eurozone this week. On Monday we will see the German Buba Monthly report, followed up on Wednesday when Germany will release both its manufacturing and its services PMIs.

This article is brought to you in association with Spreadex. All opinions expressed in this article are from the author and do not necessarily represent the opinions of The Armchair Trader. You can find out more about Spreadex products and services here, or find more articles from Connor Campbell here.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Connor Campbell

Connor Campbell

Connor joined Spreadex in 2014 as part of a newly expanded financial analyst team after graduating from the University of Southampton with an MA in English. His focus is on providing Spreadex's customers with up-to-date and informative news, and is responsible for the market analysis found on the Spreadex website.

Connor produces three daily market updates, a daily stock earnings preview, a weekly financial market preview piece every Friday, a round-up of all the big financial stories making the weekend press every Monday morning and regular stock market features.

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