Major central banks expected to stand pat

Global markets crawled higher last week despite lingering uncertainty about US-China trade dispute prospects as President Trump indicated he didn’t have a deadline for imposing additional tariffs on China. The S&P 500 added 0.5% last week while the ICE US dollar index recovered 1.0%.

All six major developed market stock indexes extended gains. Nikkei recorded the biggest advance: it rose 1.1%. All of six major currencies reversed previous week’s dynamics against the US dollar, while the range of major currency pairs’ weekly fluctuations narrowed slightly as it edged lower. The Australian dollar was the leader in terms of percentage change: it fell 1.8% against the US dollar.

Monetary policy will be in focus this week with the Federal Reserve, the Bank of Japan and the Bank of England meetings scheduled this week. The Federal Reserve will announce its interest rate decision on Wednesday, and the Bank of Japan and the Bank of England meet on Thursday. While dovish statements are expected, no one central bank is believed will move to cut interest rates this week, particularly after upbeat US data at the end of last week.