This will be a busy week for investors. The main issues this week will be on politics, central banks, and geopolitical events.
Tomorrow, the historic meeting between the United States and North Korea will take place in Singapore. The two leaders arrived yesterday and are currently preparing for the meeting. The outcome will be consequential for the United States, North Korea, and the world in general. In a statement on Saturday, Donald Trump called it a one-shot event for North Korea. He called it a once in a lifetime event.
He was right. If the meeting fails to work the two countries will go back to the rhetoric that we experienced a year ago. Also, if the meeting fails, no other American president will be prepared to meet with the North Korean regime. In the past, Trump has argued that attacking the country was an option.
If the meeting comes out fine, the global stocks markets – especially those in Asia will likely move up. The Japanese Yen is likely to fall as investors exit the so-called safe haven.
This week, the tensions between the Western allies will continue. The tensions started a few weeks ago when Donald Trump announced that he would place tariffs on Western countries. The countries responded by announcing retaliatory tariffs on the United States. They also moved to the World Trade Organization (WTO), an organization that the Trump administration is gutting. This week, we expect this to be a major part of the trade talk, with congress and senate expected to join in. Already, a few republicans have announced a new bill to prevent the president from using tariffs.
On Thursday, the Justice Department will release a report on the Clinton investigation by the Inspector General. The meeting is expected to reignite the divisions between the democrats and the republicans. This is because republicans believe that the Justice department under Obama was supportive of Hillary Clinton during the investigation into her use of a private server.
On Tuesday, we will get the consumer prices data from the United States. The data is expected to show the core CPI at 2.2%, which is higher than last month’s 2.1%. The general CPI is expected to show the data at 2.8%, which is higher than last month’s 2.5%. This data will be released a day before the Fed releases its interest rate decision. The Fed will announce a raise of interest rate to 2.2%.
On Thursday, the ECB will release their interest rate decision. This will be a very important meeting for the ECB because, it will give traders an indication of the quantitative easing program. The ECB is expected to leave rates unchanged. The big news will be in the statement and the ending of the QE program.
On Friday, we will get the interest rates decision from the Bank of Japan (BoJ). Like the ECB, the BOJ is expected to leave the rates unchanged.
Other major economic data expected this week are the CPI from the United Kingdom, CPI data from the EU and UK, employment data from Australia, and the retail sales from the US.