The US dollar’s weakness offered a boost to emerging-market currencies and oil.
Important events this week will bring us
Time to cool down
Last Friday has brought us some good news – the phase-one trade deal between the US and China was sealed. Although the official ceremony of signing the text and shaking hands will take place in January, both sides already confirmed to the public that the step is taken.
According to the deal, the US commits to reducing certain tariffs and expanding tariffs exemption for the Chinese goods, while China commits to purchasing more of the US goods, with the focus on the farm industry. Apart from a few specifics like an advancement in regulating intellectual property rights, there was little more detail provided on the deal struck.
Hence, although the announced content of the deal made a lot of analysts highly skeptical about the actual positive effect the agreement brings, at least we have some confirmation that things are not going worse in the observable future. As the old proverb says, a weak peace is better than a strong war.
A quiet week ahead
As the US-China deal announcement, the ECB monetary press conference and the UK parliamentary elections all took place last week, this week has little to offer in comparison. Nevertheless, below are some of the noteworthy events you may be interested to watch out for.
Monday of PMIs
Today, the industrial expansion indicators will be announced by France (10:15 MT time(08:15 GMT)), Germany (10:30 MT time(08:30 GMT)), the UK (11:30 TM time (09:30 GMT)) and the US (16:45 MT time (14:45 GMT)). Although not a primary indicator like the GDP, the PMI is also an important evaluation of country’s economy and may have an effect on the respective currencies depending on how the actual indicator stands against the market expectation.
On Tuesday, Australian financial authorities will publish the monetary policy meeting minutes at 02:30 TM time (00:30 GMT). It will provide details of the last monetary policy meeting and the reasons behind keeping the country interest rate at 0.75%. More importantly, it will provide a sense of the economic outlook and the directions to look at in the future. In addition to that, Thursday will be the day when the country employment change and unemployment rates are announced (02:30 MT time (00:30 GMT)). Therefore, by the end of the week, we will have a more or less complete economic picture of how Australia is closing this year. A positive impression from the releases should strengthen the Australian dollar.
A central indicator of economic and money mass expansion, the inflation rate will be announced by the UK and Canada on Wednesday at 11:30 MT time (09:30 GMT) and 15:30 MT time (13:30 GMT) respectively, and by Japan on Friday at 01:30 MT time (23:30 GMT).
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.
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.