Week Ahead: The Fed and the BOE Take the Hotseat; OPEC+ and Non-Farm Payrolls

Fundamental analysis of Forex market

Last week, central banks and earnings were all the rage.  The Bank of Canada surprised that markets by ending its QE program and moving forward its forecast for interest rate increases.  The ECB told markets that inflation is everywhere, but they need another month to decide what to do about it. This week, the RBA, Fed, and BOE get their turns in the limelight.  Also, OPEC+ meets this week.  Will they hike output to deal with supply shortages and high prices? In addition, remember Brexit?  It’s back in the news as headlines go from bad to worse.  Earnings last week were mostly better, however AAPL and AMZN soured the risk-on mood.  This week, earnings season rolls on with SQ, ABNB, UBER, and COIN reporting at the end of the week.  Plus, its Non-farm Payrolls week!

Last Week Central Banks

Last week, the Bank of Canada surprised everyone and ended its Quantitative Easing Program.  Expectations were for a taper from $C2 billion per week to $C1 billion per week.  In addition, the BOC moved forward its guidance on interest rate increases from the second half of 2022 to the middle quarters of 2022.  They feel inflation will remain at elevated levels longer than they had expected, moderating to 2% by later 2022.

Meanwhile, the ECB made no changes, as expected.  It was orchestrated to the markets that the central bank would be holding back any decisions until the December meeting when updated forecasts will be released.  However, during the press conference Christine Lagarde noted that she expects PEPP to end as expected in March 2022, but that the conditions for a rate rise are not likely to be met in the timeframe expected by the markets.  She also said that after “soul searching”, ECB members still feel that current inflation is transitory, however it will last longer than previously expected.

This Week’s Central Banks

The Reserve Bank of Australia meets on Tuesday this week.  The RBA has effectively managed its yield-curve control program targeting the April 2024 bond, while maintaining the current pace of bond buying at A$4 billion per week until at least February 2022.  That is, until now. Recently the RBA hasn’t stepped in to buy bonds, allowing yields to rise as high as 0.76%, much higher than their targeted 0.1%.  This has led to speculation that the RBA may drop yield-curve control all together at this week’s meeting.

The US Federal Open Market Committee also meets this week.  Expectations are quite high that the Fed will announce their plans to begin tapering its Quantitative Easing Program.  The question remains as to the timing and the pace of the tapering.  At the September Fed meeting Press Conference, Powell stated that he expected the tapering to be finished by the middle of 2022.  “ A pace at a reduction of $10 billion in Treasuries and $5 billion in MBS” has been thrown around, however markets will have to wait until Wednesday for confirmation.  In addition, a rate increase is priced in for 1 year from now.  Powell will have to temper market expectations if he believes rates will be at 0% longer than that!

The Bank of England also meets this week.  Comments in recent weeks, particularly from Central Bank Governor Bailey, have led some market participants to believe that the BOE my hike as soon as Thursday!  Bailey had suggested that the central bank will have to act if inflation increases because of supply side issues (such as energy), which the central bank cannot control.  While the expectation is for unchanged, there is a chance of a hike.  Note that the BOE’s GBP 895 billion bond-buying program won’t end until the December 31st.


Will OPEC+ increase output when they meet on Thursday?  US President Joe Biden, along with Japan and India, have been pleading for a larger increase in oil supply to help lower prices, however thus far, these requests have fallen on deaf ears.  Saudi Arabia continues to say that we are not out of the woods yet regarding the cornonavirus and that demands remains vulnerable.  That may be true, with Russia entering a 1-week lockdown and other European countries showing increases in new daily cases. WTI is currently trading above 83 Dollars and Brent above 83 Pounds. OPEC+ was comfortable leaving output unchanged at 400,000 bpd at their October meeting, however prices were lower.  Will the higher prices cause the cartel to increase output?


Remember Brexit?  This time last year, markets were unsure if a deal would be signed by the deadline of December 31st, 2020.  However, the UK and EU got it together and a deal was signed with 1 day to spare.  Brexit is back in the headlines once again.  My colleague Fiona Cincotta describes the current situation:

Brexit headlines seem to be going from bad to worse. The ongoing post Brexit fishing spat with France stepped up a gear as France captured a British fishing boat and fined another.  The French Agriculture Minister confirmed that there has been no progress in talks. 

But perhaps more notably, rumors are swirling that the UK could be preparing to trigger Article 16. This would allow Britain to stop following some parts of the Northern Ireland Protocol, in effect suspending cooperation with the EU over Northern Ireland. So far, a committee has been put together to establish the potential impact of such an action. A decision could be taken as soon as the end of the month.  “


For the most part, earnings beat expectations last week. However, AAPL and AMZN both missed estimates and gave caution moving forward.  Apple warned that chip shortages may continue to lower sales while Amazon is concerned about rising costs and labor and material shortages. Be on the lookout for lower guidance updates as we move through Q4.  We continue to be right in the middle of earnings season.  This week, some of the major companies to report are as follows:  AMC, PFE, RYAAY, WBK, AMGN, TMUS, COP, BP, QCOM, CVS, STAN, BKNG, MRNA, EA, ETSY, QCOM, ROKU, SQ, ABNB, UBER, COIN. AML, NTDOY, PINS, SRBY

Economic Data

Last week was all about end of month data, including Q3 GDP and inflation data from a number of countries.  The beginning of the month is all about jobs reports.  New Zealand reports Q3 numbers on Wednesday, while both the US and Canada release their jobs numbers on Friday.  In addition, watch China’s PMI data to see if their economy continues to slow.  Other important economic data is as follows:


  • China: NBS Manufacturing PMI (OCT)
  • China: Non-Manufacturing PMI (OCT)


  • Global Manufacturing PMIs Final ex- Europe (OCT)
  • Australia: Home Loans (SEP)
  • China: Caixin Manufacturing PMI (OCT)
  • Germany: Retail Sales (SEP)
  • US: ISM Manufacturing PMI (OCT)
  • US: Construction Spending (SEP)


  • European Manufacturing PMIs Final (OCT)
  • New Zealand: Building Permits (SEP)
  • Japan: BoJ Monetary Policy Meeting Minutes
  • Australia: RBA Interest Rate Decision
  • Canada: Building Permits (SEP)
  • US: IBD/TIPP Economic Optimism (NOV)


  • Global: Services PMIs Final ex- Europe (OCT)
  • New Zealand: Unemployment Change (Q3)
  • Australia: Building Permits Prel (SEP)
  • Australia: RBA Chart Pack
  • China: Caixin Services PMI (OCT)
  • EU: Unemployment Rate (SEP)
  • US: ADP Employment Change (OCT)
  • US: Factory Orders (SEP)
  • US: ISM Non-Manufacturing PMI (OCT)
  • US: Fed Interest Rate Decision
  • Crude Inventories


  • OPEC+ Meeting
  • Europe: Services PMIs Final (OCT)
  • Australia: Retail Sales Final (SEP)
  • Germany: Factory Orders (SEP)
  • UK: Construction PMI (OCT)
  • EU: PPI (SEP)
  • UK: BOE Interest Rate Decision
  • US: Trade Balance (SEP)
  • US: Unit Labor Costs Prel (Q3)
  • US: Nonfarm Productivity Prel (Q3)
  • Canada: Trade Balance (SEP)


  • Australia: RBA Statement on Monetary Policy
  • Germany: Industrial Production (SEP)
  • UK: Halifax House Price Index (OCT)
  • Germany: Construction PMI (OCT)
  • EU: Retail Sales (SEP)
  • US: Non-Farm Payrolls (OCT)
  • Canada: Employment Change (OCT)
  • Canada: Ivey PMI s.a. (OCT)

Chart of the Week: Daily Microsoft (MSFT)

Source:  Tradingview Stone X

Microsoft has surpassed Apple and is now the world’s largest company.  The stock price is up over 7.5% this week to an all-time high of 330.65. Support is at the gap, from the close last Tuesday to Wednesday’s open, between 310.11 and 316.  Below there is horizontal support at 305.85 and then the 50 Day Moving Average at 300.51.  280.25 is a confluence of support from an upward sloping trendline and previous lows from early October.  Resistance: let’s put it at the 261.8% Fibonacci extension from the highs of August 20th to the lows of October 4th.  Also notice that the RSI is in overbought territory, though it is still pointing higher.  Therefore, this currently is not useful as an indicator of a reversal.

The RBA, Fed and BOE get their turn this week to describe how they will control (transitory) inflation.  Markets will be hanging on every word looking for clues as to when they will be ready to hike rates.  In addition, more earnings and jobs data should provide plenty of news and headlines to move the markets!

If it’s your turn, don’t forget to move your clocks!

Have a spooky weekend!