Trading Plan – Monday 1st November 2021: Big things happening this week
Good morning traders.
Last week was quiet with very changeable risk sentiment. The major event was the European Central Bank commenting that inflation was likely to be more permanent than previously thought, but also indicating that they did not see any interest rate hikes before the end of 2022. This “unusual” view makes sense in that hiking interest rates is not going to fix the world’s supply chain problems that are fuelling inflation. The ECB’s position puts them at odds with the Fed and Bank of England, and ECB President Christine Lagarde said that comparisons with other central banks was “odious”. So there.
This week should be interesting. We have kicked off with Japan Prime Minister Kishida winning the general election, something the markets approve of as he is talking about lots of lovely economic stimulus to come. The Japan225 gapped up and is moving up nicely. On Wednesday we have the Fed, where it is expected they will initiate tapering. On Thursday we have the Bank of England where an interest rate hike of 10 to 15 basis points is expected. The rationale for this, other than to be seen to be doing something, is hard to fathom. What’s perhaps more interesting is what they will do with the current stimulus programme. Maintaining stimulus while increasing interest rates is giving me cognitive dissonance. I am not the only one.
Also on Thursday, we have an OPEC meeting. On the table is the issue of increasing production of oil against the background of surging gas prices. They had a crack at this back in week 40 but decided to do nothing. An increase of 400,000 barrels per day is being mooted.
That should be enough fun for one week.
As always, I go into more detail in today’s video.
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