2021-03-09 08:13:07
WEEKLY MARKET UPDATE
Stimulus: A Double-Edged Sword? The stimulus package will be moving to the upper house after getting approved by congress. The motion will be a priority agenda on Tuesday. After the passing, it will be sent to President Joe Biden for the final sign. We expect this to be concluded before March 14th, when the enhanced jobless benefit expires.
So, What Does This Enhanced Relief Package Mean?
It will boost economic recovery, activities in the stock market, and more money for crypto and forex traders.
Caveats
Despite the excitement, there are caveats that the enthusiasts will need to grapple with. Firstly, there is the fear of the economy having too much money chasing a few goods. So, inflation and interest rates are likely to go up. Already there is enough pressure on the US dollar, so releasing more money into the economy will put more pressure on prices.
According to the Fed chairman Jerome Powel, the anticipated price jumps should not make people panic and cause changes to the existing monetary policies. The policies are expected to remain supportive until such a time that the economy will be way up on the recovery path and stable.
Updates
We expect to receive no report from the central bank until after it holds the next meeting on March 16-17. However, there are the jobless claim figures and consumer sentiment report that will be released on Thursday.
ECB meeting – for the Euro, the ECB meeting will be the main focal point this week. It will be the first meeting after many weeks of lockdowns. It will feature pronouncements from the policymakers who will assess how much damage the economy has suffered. Also, it will release details on the vaccination rollout, its traction, and the effort the US and the UK have put in place.
Elsewhere, ECB head Christine Lagarde will be releasing the bank's quarterly forecast at the policy meeting press conference. Also, the Eurozone will be releasing its industrial production figures on Friday. The figures are expected to show how production has contracted in various sectors.
UK GDP
The UK January growth figures are to be released on Friday. We expect the figures to show the sharp contraction suffered in the first three months of 2021. The contraction was caused by a return to total lockdown and Brexit effects.
Generally, we expect the GDP growth to below as a result of lockdowns. It will also show how the EU change of its trade terms has impacted the UK economy.
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