Weekly comment – ECB and BoC to go their separate ways



Optimism returned to stock markets as a stellar earnings season calmed nerves, pushing investors away from the safety of the USD. The upcoming week is huge, with three central bank meetings, the tech titans reporting earnings, and a ton of crucial economic data to keep things exciting. 

The highlights: 
  • The ECB meets on Thursday and could push back against market pricing for a rate increase next year, since the European economy is still grappling with stagflation risks. That could inflict some more damage on the EUR.  
  • The Bank of Canada might do exactly the opposite on Wednesday. The Canadian economy is so strong that it might signal rate increases will come faster and more powerfully, adding fuel to the CAD’s recent rally. 
  • In Japan, the central bank meets on Thursday but nothing is expected. The JPY is at the mercy of foreign central banks instead. More importantly, US GDP could disappoint on Friday, given what the Atlanta Fed GDPNow model suggests. 
  • Meanwhile in commodities, OIL prices keep pushing higher as the global energy crisis unfolds. GOLD is also showing some life, drawing power from rising inflation expectations. 
  • Finally, stock markets are partying amid a stellar earnings season so far. Next week will be huge in this sense, with Facebook, Apple, Microsoft, Amazon, AMD, and many others releasing their quarterly results. 

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