USD’s rally takes a pause, while riskier assets are modestly rising.
Euro zone heads north, but inflation slows
In the nearer week data should confirm the euro zone economy is going up, after the IMF upgraded surge forecasts and Greece got back to the debt market. Nevertheless, inflation figures could affect ECB plans to get down to tightening policy.
Surge in the single currency area dared to surpass paltry expansion in America and the United Kingdom during the first quarter and the pace didn’t cool in the April-June period.
The euro zone might not be surge champion in the second quarter, especially after the US economy rebounded to an annualized 2.6% due to consumer spending as well as business equipment investment.
Friday’s data unveiled that the euro zone's number two economy, France, added by 0.5% for a third successive quarter. Meanwhile, Spanish GDP got back to pre-crisis levels, offering a 0.9% expansion.
As compiled by the European Commission, in July, euro zone economic sentiment rallied for a third straight month, hitting a fresh 10-year maximum because of a pick-up of the prevailing services sector. As for confidence levels in all sectors, and for customers, they exceeded historical averages.
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.
Poor US data, slow vaccine distribution, rising virus cases worsened the market sentiment and underpinned safe-haven currencies like the USD, and JPY.
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
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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.