Volatility of the financial markets, except by supply and demand, is also caused by everyday events, published data, and decisions by significant institutions around the world (central banks, organizations) and a number of economic indicators. Traders and investors at the world markets monitor the changes in the economic calendars and react timely aimed at higher profit realization, while the analysts and the experts are using these in interpretation of the current and future investment possibilities, or shortly, the economic indicators are presenting the health of an economy.
Most frequently monitored and essential for the development of a country are the deposit interest rates, unemployment rate, GDP, price indices, current account balance and other, which have different impact on the foreign markets and decisions by investors.
Currency trading indicates monitoring of the situation in economies where these are domicile. First indicator, which mostly impacts the movement of the financial markets in general around the world, is the federal funds rates published by the central banks by each of the countries, although they are moving at very low level (almost zero) for a longer period of time. Latest information by the US Federal Reserve’s is that two increases of these is planned (current level 0,25%) until the end of year 2023, which caused small increase of USD relative to other currencies, because the signals for increase or decline of interest rates have influence on appreciation or depreciation of the domestic currency. The European Central Bank, following the reduction of the Main Refinancing Rate to 0% in 2016, does not give signals that it would change it in near future, until certain conditions in the economy are not met (growth of inflation and employment). Swiss Central Bank has the lowest interest rate in the world (-0,75%), which has not been changed since 2015, but has intervened on the appreciated Swiss Franc by purchase of foreign currencies, whereby the Bank in year 2020 purchased 110 billion Francs, and 296 million franks were purchased in the first quarter of year 2021.
On behalf of the ACI Slovenia Executive Committee, it is my pleasure to invite you to our webinar, which will be held on Wednesday, 15th December 2021 at 2.30 pm CET time.
The presentation titled ‘2022 Outlook: Risks and Rewards’ will be held by Mohit Kumar, the well-recognized Interest Rate Strategist, who is a Managing Director within the European Interest Rates Strategy Team at Jefferies International Ltd.
After the Q&A session, Rui Correia, Executive Director and Chair of Board of Education at ACI Financial Markets Association will highlight the latest developments in the education of ACI FMA.
2020 was a year of surprises. While we move forward in 2021, the world is simultaneously facing two unseen crisis. First, the need to renew the finances in the public sector. Second, the need to deal with the climate changes, speeding up the transfer to renewable energy sources and transition of the world economy to a more sustainable path.
Merging in terms of strengthening the positions of the domestic market would make sense for many banks given that they are still segmented, whereby a number of small banks do not have economy of scale in order to compete efficiently, and keep, at the same time, the profitability and make the necessary investments in technology.
The European Central Bank remained unaltered the monetary policy at the first meeting in year 2021, after expanding its Pandemic Emergency Purchase Program (PEPP) for another 500 billion Euros and continued it until March 2022. However, the investors see that the central bank is reiterating its effort to adjust the policy as and when needed, leaving the door open for further stimuli, under circumstances of increased infections and new blockages. Given that many analysts project higher instability in the coming months, traders have to ensure to keep up with all the current issues, and thus, the positive impacts from the stimulating package are remain to be seen in the coming period.
While ECB should be in state of rest in the coming months, it shall probably be focused on its recently announced review on strategy for stimulating the openness, strengths and durability of the EU economic and financial system in the years to come. This strategy is intended to provide a leading role to Europe in the global economic management and enable good functioning of the international financial markets and multilateral system based on rules.