US labor market data came at the top of last week's economic data, showing the US economy improved despite the economy losing 33,000 jobs in September, but wage and unemployment data showed a marked improvement. The desire for the independence of Catalonia from Spain also dominated the eurozone significantly.
On the economic calendar today, the most prominent headline was Janet Yellen, FED Governor speech, entitled "Inflation, Uncertainty and Monetary Policy", warning FOMC from moving too gradually and confirmed that the Fed able to meet the inflation target of 2%, and not considering changes in the target, noting that it is the uncertainty that strengthens the policy of gradually rate hike, which she supports despite the weakness of inflation.
The remarks by Janet Yellen, Federal Reserve Governor, were as follows:
The markets absorbed the Fed's decisions yesterday, US stocks started to fall from historical highs and the US dollar saw some slight declines after rising overnight after the Federal Reserve kept interest rates unchanged at 1.25% and left the door open for a third raise this year.
The Senate Banking Committee voted today with 17 votes to 6 to introduce candidate Randal Quarles to the FOMC. Earlier in the day, WSJ reported that Trump was unlikely to nominate Gary Cohn as chairman of the Federal Reserve Bank as an alternative to Janet Yellen, whose term expires next February.
The US dollar rose during the week, as the dollar index reaching a three-week high of 94.04, supported by positive retail sales that beat expectations and rose by 0.6% in July. Core retail sales rose by 0.5%.
This week, there has been a lack of significant economic data. The start was in Australia, when inflation figures slowed in the second quarter of 2017 unexpectedly, with the consumer price index rising 1.9% year-on-year, while rising 0.2% quarter-on-quarter. The Australian dollar rose throughout the week against the US dollar, to a two-year high of 0.8064.
The markets were calm in today's trading amidst the absence of important data and events on the economic calendar, as the markets are awaiting the minutes of the Fed's last meeting in June which raised interest rates to 1.25%, plus the issue of reducing its balance.
The markets were relatively quiet during the day and did not witness many notable moves as markets awaited the FOMC meeting to announce the rate decision. The markets have priced to raise interest rates by 94%. Markets will be waiting for comments by Janet Yellen, Federal Reserve Governor at the press conference, and to get more information about the US Federal Reserve cutting its balance sheet by about 4.5$ trillion later this year.
After a week full of major events, this week comes with a lot of data and events. More than one central bank will be meeting this week to decide on interest rates, but most of the attention will be directed towards the FOMC with the possibility of a rate hike during this meeting. Next to these meetings will be some important economic data that will also play a role in market movements.
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