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 things this week will bring us!
- The US retail and core retail data (Mon 15:30 MT) - the September figures are expected to increase by 0.4% and by 0.3% correspondingly. The actual data for the last months came out lower than the expectations. Will it happen this month? Let's wait.
- New Zealand quarter CPI (Tue, 12:45 MT) – the forecasts for this indicator of inflation are quite optimistic due to the higher oil prices. According to analysts, it increased to 1.7% in the 3rd quarter. If the actual data beat the expectations, the kiwi will increase. For now, the inflation remains below the Reserve bank of New Zealand's target of 2%, so there is no chance the bank will make a rate hike any time soon.
- British CPI (Wed, 11:30 MT) – The level of annual UK consumer inflation is expected to reach 2.6%. If the actual figures are higher, the GBP can increase. However, the situation with Brexit plays a more important role for the British currency right now.
- Federal Open Market Committee meeting minutes (Wed, 21:00 MT) – while the experts do not expect a new rate hike this month, there are projections of another rate hike in December 2018. During the meeting, they will tell about the reasons for the previous decision and we can anticipate clues on the future rate hike. Recent talks about the "neutral rate" and Trump’s criticism of the Fed's policy make this meeting even more important for the USD.
- The Australian unemployment rate and employment change (Thu, 3:30 MT) – the level of employed persons is expected to increase by 15200 people in September. In its turn, the unemployment rate is forecast to stay at the last month level of 5.3%.
The EU Brexit summit (Wed-Thu) – during the summit dinner the countries can reach a highly expected agreement. In addition, the EU negotiator Michel Barnier said the Brexit negotiations are in their final stages. Despite his words, the solution on the Irish border backstop is still unclear and its outcome can affect the GBP.
Saudi Arabia is planning to adjust countermeasures against the US sanctions, which include oil. According to the plan, they will hit the American economy more, than Saudi Arabia's.
In Germany, Angela Merkel's sister party has suffered huge losses during Bavaria's state elections.
Have a good week and successful trading!
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.
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.
We are now past the middle of January, and this means that the largest US companies will report their earnings for the fourth quarter and many of them will provide the results of the entire 2020.