Poor US data, slow vaccine distribution, rising virus cases worsened the market sentiment and underpinned safe-haven currencies like the USD, and JPY.
5 important events this week will bring us
The second half of this week is going to be well loaded with big events. All major currencies will be affected, for this reason, brace yourselves and prepare for some price action.
- British monthly GDP growth rate (Tue, 11:30 MT time (09:30 GMT))The last two indicators of the monthly GDP growth rate have been at -0.1%. If the monthly GDP growth for October is better than the expected 0.1%, it will make the British pound rise.
- Federal Funds Rate (Wed, 21:00 MT time (19:00 GMT)) The American financial authorities will announce the interest rate and release the monetary policy statement. They will also give the economic projections for the nearest future and explain the main issues behind the chosen monetary stance. Steady rate (currently at 1.75%) and positive perspectives will support the US dollar.
- The British Parliament elections (Thu, all day)Finally, we will see the resolution of the months-long parliamentary debates and clarification of the coming course of development in Great Britain. Definitely, it is going to be a hard day for the British pound, but the victory of Boris Johnson would boost it.
- ECB Main Refinancing Rate and Press Conference (Thu, 15:30 MT time (13:30 GMT))The European Central Bank will announce the interest rate, to which no change is expected (currently at 0%); more importantly, the ECB head Christine Lagarde will give a press conference, which will reveal the economic outlook of the euro area and the intentions of the monetary policy makers. A positive tone of the speech will strengthen the euro.
- American monthly retails sales (Fri, 15:30 MT time (13:30 GMT))Although not a major indicator, still the retail sales give a very representative outlook on consumer sentiment. If the picture is more positive than the market expectation, the US dollar will rise.
Strong jobs data provided by the Non-Farm Payrolls on December 6 boosted the US dollar. However, the upward movement of the US dollar does not gain full power as there still are serious concerns among the investors on the next stage of the US-China trade war. The deadline of December 15 for imposing new tariffs on the Chinese goods by the US is still in place, while the last comment from the US President Donald Trump was that he liked where the negotiations were going. This means that tensions will keep the market’s optimism in check until next Monday at the very least.
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.
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The Canadian central bank will make a monetary policy report and announce interest rates on Wednesday, January 20, at 17:00 MT time. Also, the BOC press conference will be held later.
USD’s rally takes a pause, while riskier assets are modestly rising.