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The main events of the week are Non-Farm Payrolls (NFP) and the OPEC meeting. NFP is one of the most impactful indicators, that’s why it usually grabs a lot of attention of traders. This time, the focus will be even bigger as the Fed will base its further policy decision on employment. OPEC+ meeting will decide whether to hike oil output further or not.
After Fed’s hawkish decision in June, banks have started making bullish forecasts on the US dollar. Further hints at Fed’s tapering (cutting bond buys) in coming months will lift the US dollar. The better-than-expected NFP may push EUR/USD to early-April lows at 1.8000. The worse-than-expected NFP may drive the pair to 1.2000.
USD/CAD jumped on the Fed hawkishness. However, the Bank of Canada has already tightened the policy, that’s why the CAD is better protected from unexpected Fed policy actions than other currencies. Besides, the Canadian dollar should gain on rising oil prices. The majority of the correction in USD/CAD is over, that’s why USD/CAD may drop to the 50-day moving average of 1.2200.
XBR/USD (Brent crude oil) has hit the record high of $75 a barrel. The increasing demand for crude oil is likely to support the oil rally further to the psychological mark of $80 a barrel. On Thursday, OPEC+ members have to announce their decision on supply increases and give an outlook for the oil market.
IBM is a multinational technology company. Its hybrid cloud software gives the company a boost. The Q1 earnings report revealed that its cloud revenue grew 21% year over year. Since the company is trading at the local lows, it has a high potential to grow.
The United States Bureau of Labor Statistics will publish the US Consumer Price Index (CPI) m/m on January 12 at 15:30 GMT+2. The index measures a change in the price of goods and services purchased by consumers.
The US dollar index keeps rounding above the 103.60 historical support level. The buyers have already defended this level for three weeks, highlighting their interest in the greenback. Thus, buying USD looks less risky right now.
On the H4 timeframe, the US dollar index has formed a bullish falling wedge. At the beginning of the trading session, the price is testing the upper border of this wedge. Thus, in case of a higher-than-expected Core PCE Price Index m/m, the US dollar will skyrocket against other currencies.
The Reserve Bank of Australia (RBA) will make a statement and release a Cash Rate on February 7, 05:30 GMT+2. It's among the primary tools the RBA uses to communicate with investors about monetary policy.
This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.
S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.
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