This is especially important as many new developments in global markets are starting to emerge with quite surprising effects and implications. The United States has extended its blockade against sanctioned oil tankers emerging from and entering ports in Venezuela. This step deepens the current dire political and economic crisis in the country. At the same time, President Trump is apparently trying to advance a new version of the Monroe Doctrine. We don’t know if he’s simply trying to unseat the Venezuelan government. Central banks across Asia are stepping up efforts to recalibrate their monetary stance. The Reserve Bank of Australia (RBA) will be the most hawkish central bank among its developed market peers. Significant will be key economic data releases, including US GDP figures as well as core, headline, and PCE inflation rates.
The political and economic climate is undoubtedly turbulent, with several central banks and financial institutions making pivotal decisions that could impact global markets.
US Blockade on Venezuelan Oil
Last week, the US government announced the most extreme measures yet, a full-blown blockade on all sanctioned oil tankers associated with Venezuela. The reasoning behind this move is to increase the pressure on the Venezuelan government. It arrives as a welcome answer to soaring public outcry over the country’s faltering political legitimacy and troubling economic incompetence. The goal of the blockade is to cut the country’s essential oil exports, which are key to the country’s economy.
President Trump has signaled a potential shift in US foreign policy regarding Venezuela, seemingly reviving a modern interpretation of the Monroe Doctrine. Historically, this doctrine pushed US interests in Latin America. Its resurgence today reflects a deep desire — even an eagerness — to intervene more forcefully in Venezuelan affairs. Analysts warn that these types of measures might escalate security risks across the area.
Despite these developments, the future remains uncertain. Whether this blockade is truly the best means of achieving those goals is up for debate. At the same time, Venezuela is working hard to find other markets for its oil.
Central Banks’ Monetary Policies
Within Asia it’s the Reserve Bank of Australia that’s next in line to sound more hawkish. This change will make it unique among its peers in the coming weeks. This shift has come with inflationary pressures still being a key concern for most economies. The RBA’s resolve to continue tightening monetary policy could be seen as evidence of its determination to keep a lid on the economy amid growing inflationary pressures.
The Bank of Japan (BoJ) is also in the news as it gears up to a crucial meeting on October 24. BoJ Governor Ueda will likely be pressed on monetary policy decisions that would impact markets at home and abroad. Coming up after this meeting, Tokyo CPI for December comes out on Friday. This new data will provide exciting new perspectives into Japanese inflation path.
“The Bank, in accordance with improvement in economic activity and prices, will continue to raise the policy interest rate and adjust the degree of monetary accommodation.” – Bank of Japan
Japan’s nationwide CPI for November hit the wires during the Asian session. Our first update illustrates the persistently inflationary dynamics at play across the country.
Key Economic Data Releases
Over the course of the week, a number important economic indicators will be released that may help clarify hawkish or dovish market assumptions. US GDP rate for Q3 will come out next Tuesday. Look at the growth rate, an amazing projection of 3.2%. This is the one economists and investors will be watching closely. It will provide a unique perspective on the health of the US economy.
At 2:00 pm, the FOMC will release its minutes from the December 13 meeting. We’ll use this release to explain some of the recent debates over monetary policy. The Bank of England (BoE) just recently lowered interest rates by 25 basis points to 3.75%. This decision is intended to support more robust economic activity considering the limited growth outlook.
In Canada, BoC Governor Tiff Macklem addressed inflationary concerns in a recent statement:
“Inflationary pressures continue to be contained despite added costs related to the reconfiguration of trade. Total CPI inflation has been close to the 2% target for more than a year now, and we expect it to remain near the target.” – BoC Governor Tiff Macklem
As all countries adjust from an unprecedented pandemic economy, the excitement for new data releases only increases.