The Week Ahead: 22nd – 26th January 2024

Overview for the Week Ahead 

Highlights of the Week 

  • US Services PMI numbers, inflation, and personal income/spending to impact bets on a March Fed rate cut. 
  • The ECB monetary policy decision and press conference will be pivotal for the EUR. 
  • Stimulus chatter from Beijing and the Bank of Japan’s monetary policy decision also needs consideration. 

For the US on Wednesday, preliminary private sector PMIs for January warrant investor attention.  

Q4 GDP numbers, core durable goods orders, and jobless claims data will garner investor interest on Thursday. The GDP numbers and labour market data will likely have more influence. Weaker-than-expected GDP figures and a spike in jobless claims could raise bets on a March Fed rate cut. 

However, inflation and personal spending/income numbers will influence interest rate expectations on Friday. Softer inflation numbers and a pullback in income/spending would increase bets on a March Fed rate cut. 

Preliminary private sector PMIs for France, Germany, and the Eurozone will influence EUR/USD on Wednesday. The Services PMI numbers will have more impact. The services sector remains the driving force behind inflation. Weaker service sector activity and downward trends in input prices could incentivise the ECB to begin discussing rate cuts. 

On Thursday, German business sentiment figures also need consideration. Weaker sentiment could raise concerns about the labor market amidst the threat of a prolonged recession. A deteriorating macroeconomic environment could impact hiring plans and affect private consumption. 

However, the ECB monetary policy decision (Thurs) will be the focal point. The markets expect the ECB to leave interest rates unchanged, putting investor focus on the ECB press conference. ECB President Lagarde and voting members have poured cold water on discussions about rate cuts. The outlook toward the economy, inflation, and interest rates will warrant investor attention. 

On Friday, German consumer confidence figures for February will also need consideration. A weakening consumer confidence environment could signal a pullback in consumer spending. Downward trends in consumer spending could further impact the German economy. German private consumption contributes over 50% to the German economy. 

Beyond the numbers, ECB commentary will move the dial. ECB President Christine Lagarde will speak on Monday and at the ECB press conference. 

A pickup in UK services sector activity could delay Bank of England discussions about interest rate cuts. Last week, UK inflation unexpectedly accelerated, while retail sales plummeted. A pickup in service sector input prices would align with Bank of England plans to delay discussions on rate cuts. 

Expectations around a Bank of Japan rate rise have diminished significantly in the last few weeks, with the latest economic data lending support to the idea that there is no rush to raise rates out of negative territory. The weakness of the US dollar in recent weeks has helped ease the pressure on the BOJ in recent weeks. 

Recent inflation numbers have pointed to an easing of price pressures with a sharp slowdown in cash earnings in November. At its last meeting in December the BOJ kept monetary policy unchanged while offering little in the way of guidance as to their future intentions. That said the central bank is still expected to try and begin the process of a more normal monetary policy over the next few months with rates expected to come out of negative territory in the first half of this year. 

Have your trading charts ready this week! 

This Week’s High Impact Events 

The times below are GMT +2. 

Monday 22nd January 

  • No High Impact Events 

Tuesday 23rd January 

  • Tentative – Japan – Monetary Policy Statement, BoJ Policy Rate, BoJ Outlook Report, BoJ Press Conference 

Potential instruments to Trade: JPY Crosses.  

  • 23.45 – New Zealand – CPI q/q 

Potential instruments to Trade: NZD Crosses.  

Wednesday 24th January 

  • From 10.15 – Europe – Flash Manufacturing PMI, Flash Services PMI 

Potential instruments to Trade: EUR Crosses.  

  • 11.30 – UK – Flash Manufacturing PMI, Flash Services PMI 

Potential instruments to Trade: GBP Crosses.  

  • 16.45 – US – Flash Manufacturing PMI, Flash Services PMI 

Potential instruments to Trade: USD Crosses.  

  • 16.45 – Canada – BoC Monetary Policy Report, Boc Rate Statement, Overnight Rate 

Potential instruments to Trade: CAD Crosses.  

  • 17.30 – Canada – BoC Press Conference 

Potential instruments to Trade: CAD Crosses.  

Thursday 25th January 

  • 15.15 – Europe – Main Refinancing Rate, Monetary Policy Statement 

Potential instruments to Trade: EUR Crosses.  

  • 15.30 – US – Unemployment Claims, Advance GDP q/q 

Potential instruments to Trade: USD Crosses.  

  • 15.45 – Europe – ECB Press Conference 

Potential instruments to Trade: EUR Crosses.  

Friday 26th January 

  • 15.30 – US – Core PCE Price Index m/m 

Potential instruments to Trade: USD Crosses.  

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