Last week was a relatively strong week for the market after the strong US jobs numbers. As a result, US indices like Dow, Nasdaq, and S&P are trading near their all-time levels. The question is whether the ongoing trend of strength may continue as traders start to wonder about the pace of the expected interest rates cuts this year. Investors may focus on the following big stories this week.
Deutsche is the biggest bank in Germany but in recent years, the bank has been in trouble. It has suffered major losses and fines that threaten its existence. Over the weekend, the bank confirmed what investors were aware all along. In a statement, Christian Sewing, the CEO announced that he was about to start restructuring the bank in a process that may cost more than $10 billion. In the biggest overhaul, the bank may start a $.7.8 billion bad bank and exit the equities trading business. These changes may lead to more than 20k job cuts. This week, investors may continue their discussions on whether these changes may go far enough.
Jerome Powell Testimonies
This week, investors may continue to focus on the Federal Reserve chair as he testifies in congress. The testimonies may be so important because they may give investors a further direction on the number of rate hikes that are expected this year. In the previous speeches and statements, the chair has said that the bank may likely do a rate cut this year. Investors expect the bank to have a rate cut in July and two more later this year. This week’s testaments are the first after the US NFP data.
Bank of Canada
On Wednesday, investors may focus on the Bank of Canada (BOC), as the officials deliver their rates decision. Analysts expect the bank to leave interest rates unchanged at the current 1.75%. They also expect the bank to diverge from the other international banks like the Fed and RBA by leaving rates unchanged throughout the year. The Fed has pointed that it may lower rates in the coming meeting. The bank is not under pressure to cut rates this year but if the Fed moves aggressively to slash rates this year, BOC may have to cut at least once in 2020.
Other Economic Data
Investors may receive a bunch of economic data. Today, they may receive the German trade and industrial production and the Chinese forex reserve data. Tomorrow, they may receive the unemployment data from Switzerland, Mexican CPI data, and API weekly crude reserves data. On Wednesday, they may receive the Chinese, Norwegian, and Brazil CPI data. They may also receive the firsr reading of the UK Q2 GDP data, manufacturing production, industrial production, and trade data. They may also receive the EIA crude inventories data. On Thursday, they may receive the German, Sweden, and US CPI data. They may also receive the ECB minutes and the WASDE report. On Friday, they may receive the Chinese trade, EIA monthly report, and the Fed monetary policy report.