People’s Bank of China surprised the market last Friday by cutting interest rate. This was a big surprise to the market because PBOC always act during the weekend but this time around, they could not wait that long. On the back of this, stocks soar to a weekly high. However, it is a bit worrisome why china is acting so fast to cut interest rate despite a stronger than expected GDP figure released last week. This calls for more questions about the authenticity of figures coming from china.
This week will be a busy week for the market as we await the FOMC meeting, BOJ meeting, and RBNZ meeting. These events are likely to shape the direction of the market going into 2016. The BOJ are likely to leave decision unchanged although there are some speculation about a possible rate cut of quantitative easing but some Advisers of Kuroda already ruled out the possibility of any rate cut or quantitative easing. USDJPY currently trading above 120.00 levels which shows the yen is relatively weak but we might see some strength on JPY going into BOJ meeting because the odds of a rate cut or Quantitative easing is very low. The FED is most likely to leave interest rate unchanged as well because inflation remains low and global economic uncertainty is still high. The RBNZ is expected to leave interest rate unchanged.
Major economic data to watch this week include: US Home sales, core durable goods order from US, UK GDP (QoQ), EZ Inflation, Canadian GDP (MoM), US GDP (QoQ) and US pending home sales