Central banks and financial data eyed
For another week, US fundamentals tended to capture most of the headlines and the trader’s attention. Albeit I consider that US fundamentals continue to affect the markets, I also believe that several events could shift attention to other regions.
The week ahead will be a busy one, given that on the monetary front we highlight the interest rate decisions of BoC on Wednesday and ECB and BoJ on Thursday. At the same time, I also note the interest rate decisions of Norway’s Norgesbank and Turkey’s CBRT.
As for financial releases, we get an early start on Monday with the heavy impact of China’s GDP growth rate for Q4. Among a slew of data, we also highlight UK’s, Eurozone’s and Canada’s inflation rates for December on Wednesday.
On Thursday, we get Australia’s employment data for December, the US weekly initial jobless claims figure and New Zealand’s CPI rates for Q4. On Friday, besides the preliminary PMI readings of January for Australia, Japan, UK, Eurozone and the US, we also note the release of UK’s retail sales for December and Canada’s retail sales for November. Let’s get in more details.
USD – US fundamentals to continue to dominate the headlines
GBP – CPI and retail sales in the epicentre
EUR – ECB, COVID 19 and preliminary PMIs to move the EUR
AUD – Focus on employment and Chinese data
CAD – Oil prices and BoC to influence the CAD
The upcoming week will be very interesting, we may see the USD relenting some of the initiatives to other currencies as local issues may take some precedence for their respective currencies.
Issues such as the path of the pandemic in various countries tend to remain a cause of worry for their respective currencies. The scariest part of the pandemic now is the new strain of the virus and the question if the current vaccines could stop it.
Also, the high number of interest rate decisions by central banks and financial releases scheduled for the coming week could shift the focus of the markets away from the USD at least temporarily.
Given the fact that the number of high impact financial releases is rather low, US fundamentals are expected to keep affecting the markets and the possible inauguration of President-elect Biden could remove some uncertainty from the markets.
The possibility for some riots by Trump supporters should not be ruled out, especially after the storming of the Capitol in the past week. The issue of the proposed fiscal stimulus by Biden could also remove some uncertainty in the economic sector and highlight the US economic outlook, as well as underscore the possibility of a swifter recovery. Also, some speculation among analysts about the Fed’s monetary policy stance could make headlines and affect the markets, ahead of the Fed’s meeting on the 27th of the month.