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

On the Macro

It’s a busy week ahead on the economic calendar, with 55 stats in focus in the week ending 29^th January. In the week prior, 74 stats had been 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 4^th quarter GDP figures due out on Thursday. While growth will be slower than the 3^rd quarter rebound, what impact the 2^nd 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 1^st 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 4^th 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, 4^th 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.

Out of Asia

For the Aussie Dollar:

It’s a busy week on the economic data front. The markets will need to wait until Wednesday for the first set of numbers, however.

Business confidence and inflation figures will draw interest on Wednesday.

At the end of the week, private sector credit numbers are also due out. Barring dire numbers, however, the numbers should have a muted impact on the Aussie Dollar on Friday.

From elsewhere, GDP figures from the U.S and the EU and COVID-19 news updates will also be key drivers in the week.

The Aussie Dollar ended the week up by 0.16% to $0.7715.

For the Kiwi Dollar:

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

Economic data is limited to December trade data, due out on Thursday.

With little else for the markets to consider, expect the numbers to influence.

The Kiwi Dollar ended the week up by 0.79% to $0.7189.

For the Japanese Yen:

It is a busy week ahead.

December retail sales figures on Thursday will draw plenty of interest.

At the end of the week, inflation and prelim industrial production figures will also provide direction.

Ultimately, however, vaccination rates and the trends in new COVID-19 cases will remain key drivers.

The Japanese Yen ended the week up by 0.07% to ¥103.78 against the U.S Dollar.

Out of China

It’s quiet week ahead.

There are no material stats due out of China to provide the markets with direction.

Following the recent spike in new COVID-19 cases, expect COVID-19 updates from China to influence, however.

The Chinese Yuan ended the week down by 0.02% to CNY6.4819 against the U.S Dollar.

Geo-Politics

 

U.S Politics

Stimulus talk and other policy moves by U.S President Joe Biden will be key in the week.

Progress on Biden’s vaccination target of 100 million vaccinations in the 1^st 100 days should support riskier assets.

COVID-19

Vaccination rates and availability of vaccines will be key areas of interest.

An upward trend in vaccination rates and a downward trend on infection rates would support riskier assets in the week.

Corporate Earnings

A number of big names deliver results in the week ahead.

From the U.S

Key names include but are not limited to:

American Express (Tuesday)

General Electric (Tuesday)

Verizon Communications (Tuesday)

Microsoft Corp. (Tuesday)

Johnson & Johnson (Tuesday)

Apple Inc. (Wednesday)

Boeing Co. (Wednesday)

Facebook Inc. (Wednesday)

Tesla Inc. (Wednesday)

Visa (Wednesday)