The Week Ahead: 25th – 29th January 2021

Overview for the 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 affect the markets.

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

For Japan on the other hand, 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.

For Australia, the markets will need to wait until Wednesday for the first set of numbers which include business confidence and inflation figures.

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.

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

For the U.S., 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 finalised 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 Europe, Germany, France and Spain all have releases this week. 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 U.K. this week, 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.

This Week’s High Impact Events

The times below are GMT+2.

Monday 25^th January

10.45 & 18.15 – Europe: ECB President Lagarde Speaks

Potential instruments to Trade: EUR Crosses. 

Tuesday 26^th January

17.00 – U.S. – CB Consumer Confidence