It’s a big week ahead for the global markets with the Federal Reserve and the BOE expected to post their monetary policy decisions this week, along with high-profile US labor market data.
Tuesday 30th Jan
Aussie Retail Sales m/m are due to be released tomorrow early morning at 4:30 AM GMT+4 (Dubai Time). The retail sales are expected to decline by 1.9% compared to a previous figure of 2%. If the figure comes in higher than expected, analysts expect this may be positive for the currency.
The AUD is currently boosted by the stimulus measures by the Chinese authorities done last week, but it remained at 0.6600 during the early Asian session today, pressured by a stronger USD and higher US treasury bond yields.
US CB Consumer Confidence is due to be released at 7:00 PM GMT+4 (Dubai Time). It is expected to have strengthened to 114.9 from a previous figure of 110.7.
US JOLTS Job Openings data is due to be released at 7:00 PM GMT+4 (Dubai Time). It is expected at 8.73M, lower than the previous figure of 8.79. If both figures come in higher than expected, this may be positive for the currency, according to analysts.
With weaker 2-year and 10-year US Treasury yields, the US Dollar Index (DXY) remains stable. The USD was unable to find support on Friday even after the announcement of modest Core PCE data. It showed a 0.2% monthly gain, higher than the previous figure of 0.1% but in line with expectations. The annual Core PCE increased by 2.9%, but still less than expected and lower than the previous reading.
Wednesday 31st Jan
The Australian CPI is due to be released at 4:30 AM GMT+4 (Dubai Time). It is expected to have weakened significantly to 3.7% YoY compared to a previous increase of 4.3% YoY, and the trimmed mean CPI is expected weaker. It is expected to have increased by 0.8% QoQ compared to a previous increase of 1.2% QoQ.
Chinese Manufacturing PMI and the Non-Manufacturing PMI are due to be released at 5:30 AM GMT+4 (Dubai Time). The first is expected to have strengthened to 49.2 compared to a previous of 49, yet still below the 50 reading, implying that the Chinese manufacturing industry is still facing a challenging environment. the latter is also expected to have strengthened from 50.4 to 50.6. If the figures come in higher than expected, this could be positive for the currency, according to analysts.
Germany, one of the largest economies in Europe, is expected to post its Prelim CPI figure on Wednesday. It is expected to have remained the same at 0.1% MoM. If the figure comes in higher than expected, analysts expect this to reflect positively in its currency.
Another important release on Wednesday is the ADP Non-Farm Employment Change figure which is due to be released at 5:15 PM GMT+4 (Dubai Time). It is expected to have declined significantly from a previous figure of 164K to 143K. Typically issued two days before the government-reported job data it mimics; it offers an early sneak peek at employment growth and hence consumer spending.
The Canadian GDP is also due on Wednesday at 5:30 PM GMT+4 (Dubai Time). The Canadian Economy is expected to have strengthened by 0.1% MoM from previously posting a stagnant economy.
Most importantly, the Federal Funds Rate is due to be released at 11:00 PM GMT+4 (Dubai Time), followed by an FOMC Press conference at 11:30 PM GMT+4 (Dubai Time). Investors are bracing for the likelihood of policy easing from the Federal Reserve (Fed) as inflation appears to be abating. According to the CME FedWatch Tool, futures traders have factored in a 53% chance that the Fed will lower interest rates in March, keeping them stable at the upcoming meeting at 5.5%.
Thursday, Feb 1st
Thursday holds another MPC meeting this week, but this one from the BOE. The UK Bank rate is due to be released at 4:00 PM GMT+4 (Dubai Time). The Bank of England is also expected to keep rates the same at 5.25% for a fourth consecutive month. According to the Financial Times, the UK economist Allan Monks of JP Morgan said that The BoE would need to undertake a "dovish pivot," which would acknowledge the likelihood of an easing monetary policy this summer.
More US labor market data is due to be released at 5:30 PM GMT+4 (Dubai Time). The Average hourly Earnings are expected to have declined from a previous figure of 0.4% MoM to 0.3% MoM. Non-Farm employment change is also expected to have declined from 216k to 177k, while the unemployment rate is expected to have increased by more by 3.8% compared to the previous figure of 3.7%.
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