The Week Ahead: 11th – 15th January 2021

Overview for the Week Ahead 

Asia 

Asian shares were mostly higher Monday as bullish sentiment persisted despite continuing signs of economic damage from the pandemic. 

Traders continued to be cheered by prospects that the incoming administration of President-elect Joe Biden will pump more aid into the U.S. economy, a move that will help Asia and other export-driven nations 

Japanese markets were closed for a national holiday. Adding to concerns over surging numbers of coronavirus infections, another new variant of the virus was reported over the weekend among several people who had arrived from Brazil. 

U.S. 

Politics will continue to dominate the headlines in the week ahead amid calls for President Donald Trump’s removal from office after he encouraged a mob of his supporters to storm the U.S. Capitol. 

But investors will likely be focusing more on the prospects for a bigger stimulus package after Friday’s employment report showed the U.S. economy shed jobs for the first time in eight months in December amid a resurgence of Covid-19 infections. Concerns that the vaccine rollout is going too slowly could give stock markets pause. 

Market participants will get a snapshot of how the economy is performing with the release of data on inflation and retail sales. Investors will also get to hear from several Federal Reserve speakers, including Chair Jerome Powell. And earnings season will get underway with big banks set to release fourth quarter earnings results on Friday. 

The U.S. is due to release data on consumer price inflation on Wednesday, while retail sales figures for December are due out on Friday. Inflation is expected to tick slightly higher, but remain subdued, while retail sales are expected to have been dampened by the surging virus. 

Europe 

The European parliament gets its ratification work for the Brexit trade deal under way, starting with a debate in the assembly’s international trade committee on Monday. The EU commission will also hold a series of hearings with MEPs and seminars with national diplomats covering different aspects of the accord. National Brexit attachés will be debriefed on Monday on the agreement’s governance system and on UK participation in EU programmes, while the EU parliament’s fisheries and transport committees will have presentations on relevant parts of the agreement. 

U.K. 

After a whirlwind start to the New Year, which saw new Brexit arrangements wreak havoc in the UK, and most of Britain enter a third lockdown, investors can expect a slower, but not less action-filled week. 

Coronavirus cases and deaths in Britain have reached grim record highs and London mayor Sadiq Khan declared a COVID emergency in the capital on Friday, saying that the spread of the virus was “out of control.” 

So far, over 80,000 people have died in the UK within 28 days of a positive coronavirus test since the start of the pandemic, official figures have shown. 

The week is packed for the UK. There is the monthly gross domestic product (GDP) figure for November out on Friday along with services output, goods trade balance, and industrial and manufacturing production readings. 

Bitcoin 

Interest in bitcoin has been soaring as institutional investors began buying heavily, viewing it as both an inflation hedge and as exposed to gains if it became more widely adopted as a digital currency. 

Cryptocurrencies plunged on Monday, with bitcoin dropping more than 12% to a one-week low as rising U.S. bond yields lifted the dollar broadly and hurt other safe assets that pay no income. 

Bitcoin fell as far as $33,447, its lowest since Jan. 6. Ethereum which often moves in tandem with bitcoin, fell as much as 20% to a one-week low of $1,007.51. 

The falls are much larger than the 1% drop that sent gold prices to a one-month low but reflect a wider dollar bounce against major fiat currencies as the prospect of higher U.S. interest rates tempers popular bets against the dollar. 

Today’s High Impact Events

The times below are GMT+2. 

Monday 11th January 

  • 16.30 – Canada BOC Business Outlook Survey 

Potential instruments to Trade: CAD Crosses.  

Tuesday 12th January 

  • 12.00 – U.K. MPC Member Broadbent Speaks 

Potential instruments to Trade: EUR Crosses.  

Wednesday 13th January  

  • 11.00 – ECB President Lagarde Speaks 

Potential instruments to Trade: EUR Crosses.  

  • 15.30 – U.S. CPI m/m & Core CPI m/m 

Potential instruments to Trade: USD Crosses.  

Thursday 14th January 

  • 15.30 – U.S. Unemployment Claims  

Potential instruments to Trade: USD Crosses.  

  • 19.30 – U.S. Fed Chair Powell Speaks 

Potential instruments to Trade: USD Crosses.  

Friday 15th January 

  • 15.30 – U.S. Core Retails Sales m/m & Retails Sales m/m  

Potential instruments to Trade: USD Crosses.  

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