The Week Ahead – The FED, 4th Quarter GDP Numbers, COVID-19, and U.S Politics in Focus

For the Dollar:

It’s a busier week ahead.

On Tuesday, consumer confidence figures for January will draw interest.

Another fall in consumer confidence would test support for riskier assets early on.

Mid-week, core durable goods and durable goods orders for December will provide direction.

The focus will then shift to 4th quarter GDP figures due out on Thursday. While growth will be slower than the 3rd quarter rebound, what impact the 2nd wave of the pandemic has had remains to be seen.

Weekly jobless claims figures will also draw interest on Thursday. A marked decline would support riskier assets.

On Friday, December inflation and personal spending figures, along with January’s PMI for Chicago wraps things up.

Other stats including housing sector and trade figures and finalized consumer sentiment figures should have a muted impact on the markets.

On the monetary policy front, however, the FOMC monetary policy decision on Wednesday is the main event.

Following FED Chair Powell’s assurances of no rate hikes or tapering of bond purchases, the statement will need to be aligned.

The Dollar Spot Index ended the week down by 0.59% to 90.238.

For the EUR:

It’s another busy week ahead on the economic data front.

In the 1st half of the week, German business Sentiment and consumer confidence figures will be in focus.

Expect plenty of EUR sensitivity to the numbers.

The focus will then shift to 4th quarter GDP numbers on Friday. French, German, and Spanish GDP numbers are due out.

Expect Germany and France’s GDP numbers to have the greatest impact on the EUR.

French consumer spending and German unemployment numbers will also provide direction on Friday.

Other stats include prelim inflation figures for January. Barring a marked slide in consumer prices, however, the numbers should have a muted impact on the EUR.

On the monetary policy front, ECB President Lagarde is scheduled to speak on Monday. Expect any forward guidance to move the dial.

The EUR ended the week up by 0.74% to $1.2171.

For the Pound:

It’s a relatively quiet week ahead on the economic calendar. Key stats include claimant count figures for December and the unemployment rate for November, due out on Tuesday.

Earnings and 3-month rolling employment figures should have less influence on the day.

With no other stats to consider in the week, COVID-19 will remain a key driver.

The Pound ended the week up by 0.71% to $1.3686.

For the Loonie:

It’s a relatively quiet week ahead on the economic calendar.

Building permit, GDP, and RMPI figures.

Expect November GDP and December RMPI figures on Friday to have the greatest influence on the Loonie.

From elsewhere, 4th quarter GDP numbers together with COVID-19 news updates will likely be the key drivers, however.

The Loonie ended the week down by 0.01% to C$1.2733 against the U.S Dollar.

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