Market focus of the week: European central bank’s decision hits hard

Financial markets are bracing for interest-rate decisions this week from three major Central Banks, including the European central bank, the bank of Canada and the bank of Japan. News of the US senate’s formal impeachment trial of Donald Trump, due to begin this week, is expected to have an impact on the market. In addition, the world economic forum 2020 annual meeting and Davos forum will be held from January 21 to 24 with the theme of “gathering global forces for sustainable development”, and the speeches made by world leaders and economic experts will also attract attention.

The European central bank leads the three central bank decisions

The bank of Japan, the bank of Canada and the European central bank will announce rate decisions on Tuesday, Wednesday, and Thursday, respectively.

For its part, the bank of Japan has kept negative interest rates at minus 0.10 percent for years and maintained its massive bond-buying program. Its most notable recent change has been its pledge to keep interest rates low if necessary.

The BOJ is now widely expected to leave rates unchanged at minus 0.1 percent. In addition, analysts expect the bank of Japan to pledge to keep interest rates at their current low level or even cut them until it reaches its 2 percent inflation target.

Haruhiko Kuroda, governor of the bank of Japan, is likely to signal his determination to keep monetary policy ultra-loose. Mr. Kuroda had previously said he expected short-term and long-term interest rates to remain at current or lower levels for long enough if needed.

The bank of Canada will announce its decision on interest rates on Wednesday. The bank of Canada will leave rates unchanged through 2019 and is unlikely to deviate from that trend in its first decision in 2020.

Although Canada’s Labour market is off its peak at the start of last year, the latest jobs report is encouraging. December’s inflation figures will be released shortly before the decision, and inflation has been healthy. Overall, Mr. Boros, who will step down as President in June, is likely to keep interest rates unchanged and express satisfaction with the Canadian economy.

Kathy Lien, managing director at BK Asset Management, wrote in a note that the bank of Canada is not expected to make any changes, but given the inhomogeneity of recent data, investors will be eager to see if the chances of easing have increased. Usd/cad is trading in a tight range and will have the best opportunity to break out.

At 20:45 Beijing time on Thursday, the European central bank announced its decision on interest rates. On Thursday at 21:30 Beijing time, European central bank President Christine Lagarde will hold a press conference where she will set a new direction for the euro/dollar with her general tone on the economy.

On November 1, ms Lagarde replaced Mr. Draghi as the ECB’s fourth President for eight years. Analysts generally expect ms Lagarde to continue the easy monetary policy of her predecessor, Mario Draghi, and to seek more support from the government’s fiscal policy.

At her inaugural meeting, ms Lagarde announced a strategic review by the central bank, analysts said. The ECB is unlikely to change policy now, but ms Lagarde’s comments on recent developments are set to shake the euro.

On December 12th the European central bank (ECB) announced in Frankfurt that it would keep the euro zone’s three key interest rates unchanged. The ECB said in a policy decision that the main refinancing rate, the overnight lending rate, and the overnight deposit rate will remain unchanged at 0.0%, 0.25%, and -0.5% respectively. The ECB also said in a statement that interest rates would remain at current or lower levels until it approached its inflation target.

It is worth noting that ms Lagarde’s comments at the press conference at the time triggered a market rally. The euro rallied against the dollar, the dollar index fell and gold was boosted by Lagarde’s hawkish comments.

Ms. Lagarde told a news conference at the time that the balance of risks to eurozone growth remained negative but had become less pronounced. Ms. Lagarde also said the policy review would begin in January and would be completed by the end of 2020.

Analysts said the euro could rebound against the dollar if Lagarde makes more hawkish remarks this week, which would weigh on the dollar index.

Minutes of the ECB’s December meeting showed that bank officials were “comfortable” with the current performance of inflation in the eurozone as a whole, raising the chances of the central bank maintaining monetary policy at its policy meeting this week.

European central bank President Christine Lagarde said on Jan. 13 that she wanted to announce the ECB’s strategic review on Jan. 23 and that policymakers should avoid making public comments ahead of the review.

Kathy Lien, managing director at BK Asset Management, wrote that the ECB is now conducting a policy review that could see it change its inflation target for the first time in 17 years. This change, and its explanation, could have a big impact on the euro. The January PMI gives us the first glimpse of how the eurozone economy has performed at the start of the year, and it was the event that drove the euro. Eurozone data continues to improve, leading us to believe the euro/dollar could recover to 1.12 in the coming weeks.

Trump faces an impeachment trial

The US Senate will begin its formal impeachment trial of Donald Trump on Tuesday. With the senate now dominated by Republicans, Mr. Trump is widely expected to be acquitted on the basis of his party’s majority.

The U.S. Senate on Thursday formally accepted articles of impeachment against President Donald Trump. Seven impeachment managers from the U.S. house of representatives formally read out the two impeachment charges against Donald Trump in the Senate on Thursday, opening the impeachment trial of Donald Trump in the senate as chief justice John Roberts and all the senators present took the oath.

Chief justice John Roberts will preside over the Senate impeachment trial of President Trump. He vowed to give senators a “fair trial” at the trial, which began on Tuesday.

After the senate officially opened his impeachment trial, Mr. Trump responded that he had been impeached after a perfect phone call. Mr. Trump said the senate trial would proceed very quickly. The impeachment trial was “a sham”.

Thursday’s event was just one of many procedural activities ahead of the trial, which begins Jan. 21.

This is the third time in U.S. history that the Senate has tried to impeach a President. Trump thus becomes only the third US President in US history to be tried by the senate after the 17th President Lyndon Johnson and the 42nd President Bill Clinton.

On December 8, 2019, the US house of representatives passed two articles of impeachment against President Trump, namely “abuse of power” and “obstruction of congressional investigation”.

The house accused Mr. Trump of obstructing Congress and abusing his power to pressure Ukraine to announce an investigation into his Democratic rival Joe Biden.

U.S. President Donald Trump expects the senate to initiate impeachment proceedings and is confident it will acquit him, White House press secretary Alison Grisham said in a statement last Wednesday.

Senate majority leader Mitch McConnell said last Wednesday that the impeachment trial against trump would begin on Tuesday. Mr. McConnell said the senate would meet six days a week for the impeachment trial, during which members could ask questions.

In a senate trial, if more than a two-thirds majority finds President trump guilty, he will be fired and vice President pence will take over. But if no more than two-thirds of lawmakers believe he is guilty, he will be fully pardoned and remain in office.

In the current senate, republicans hold 53 seats, Democrats 45 and independents two. The republican-controlled Senate is widely expected to exonerate Mr. Trump. None of the 53 republican senators have expressed support for removing trump.

According to CNN, the Democrats currently have a weak majority in the senate, while republicans control the chamber with a 53-45 majority. Passage of articles of impeachment requires a supermajority if at least 67 senators agree to impeach Mr. Trump.

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