World Markets Digest China Data and Await Bank of Japan Decision

The new trading week finds investors awaiting the results of several central bank meetings this week. Tonight, the Bank of Japan is expected to end its ultra-dovish negative interest rate program with a widely anticipated bump of its benchmark rate up to zero. The Reserve Bank of Australia also meets overnight.

On Wednesday the Fed releases its latest interest rate decision, statement and FOMC member forecasts. Investors may look to the forecasts particularly closely for signs of whether the US central bank is sticking to its previous forecast of 3 interest rate cuts this year or not, and if it intends to start cutting sooner, or later? Any changes to the Fed’s Quantitative Tightening program or bank support programs may also be notable. Thursday brings decisions and statements from the Bank of England and the Swiss National Bank.

Continuing from last week’s US inflation numbers that were worse than expected, today’s price reports, which include Eurozone consumer prices (3.1% as expected), Canadian industrial prices (0.7% vs previous -0.1%) and Canadian raw material prices (2.1% vs previous 1.2%), indicate steady to rising inflation pressures.

In this uncertain environment for monetary policy direction, equity trading is off to a positive start. The Nikkei rallied 2.6%, while Shanghai gained 1.0% in Asia Pacific trading. In Europe this morning, the Dax and FTSE are both up about 0.25%. NASDAQ futures are up 1.25%, clawing back all of Friday’s 1.0% loss while Dow futures are up 0.25%. The US 10-year treasury note yield is holding steady near 4.30%.

It’s a big morning for energy trading with US Crude Oil up 0.3% and Natural Gas up 5.0% in a late season surge. Metals, on the other hand, are struggling with Gold and Copper up marginally but and Platinum down 1.3%. Cryptocurrencies are sliding this morning with Bitcoin down 0.1% and Ether down 1.4%.

Economic data out of China overnight has been positive with retail sales (5.5% vs street 5.2%) and industrial production (7.0% vs street 5.0%) beating expectations. This week’s economic calendar is dominated by inflation reports from several countries, Canada and UK retail sales later in the week, US housing data throughout the week and flash PMI reports from around the world on Thursday.

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