Last week saw a wave of significant macroeconomic events, shaking up financial markets. The US decision to impose tariffs on China, Canada, and Mexico initially jolted investors, though a subsequent delay on Canadian and Mexican tariffs helped stabilise sentiment.
Bank of England Delivers Expected Rate Cut
As anticipated, the Bank of England (BoE) cut interest rates by 25 basis points. However, the voting split within the Monetary Policy Committee (MPC) signalled a more dovish stance, with two members advocating a larger 50bps cut.
Despite the easing bias, the BoE remains cautious, given ongoing economic uncertainty. Markets will closely monitor incoming data to gauge whether further rate cuts are likely.
US Jobs Report Triggers Market Volatility
The January US labour market report delivered mixed signals:
- Payrolls data came in below expectations, raising concerns about slowing employment growth.
- Unemployment fell, and wage growth advanced, suggesting continued labour market resilience.
These contradictory factors created FX market volatility, with the dollar fluctuating as traders reassessed Federal Reserve expectations.
Key Market Events This Week
This week brings another wave of high-impact economic data, including:
US Economic Reports:
- January Industrial Production & Retail Sales – Key indicators of economic momentum.
- Inflation Updates – A major factor in Fed policy decisions.
- Federal Reserve Chair Powell’s Testimony – Markets will watch for signals on future interest rate moves.
UK Q4 GDP Reading:
- The first estimate of Q4 GDP will offer a snapshot of UK economic performance and could influence BoE policy expectations.
US Tariff Announcements:
- Markets will continue to digest the weekend’s latest trade policy updates, with potential implications for global trade and currency markets.
Navigating Market Volatility
With economic uncertainty at the forefront, businesses and investors must stay informed and proactive. If you’re looking to manage currency risk or seize market opportunities, speak to a QuMoney expert today.