Last week was packed with data drops and news from the USA including more negative inflation figures that saw all other majors advance against weakened Dollar demand. This week will be quiet for the Dollar with an official bank holiday today in memory of Dr. Martin Luther King. The focus instead will be on Sterling with employment and inflation figures dropping Monday and Tuesday and retail numbers later in the week.
USA
This week will provide the Dollar some breathing room after a choppy week of inflation figures and speeches from the FED. It’s set to be an uneventful week with the focus firmly set on its rival majors. Negative news for GBP could see USD regain some losses from last week and similarly, the EUR run could be running out of steam as the Dollar Price Index looks to consolidate. Focus for the US will be on private sector earnings with reports expected from top S&P and Dow companies like Goldman Sachs, Bank of America, Procter & Gamble, Netflix, and more which will also act as a relative strength indicator of the worlds biggest economy.
EU
It’s also a relatively quiet week for the EUR in the absence of high-tier macroeconomic data releases. EUR/USD lost the traction it made last week after climbing to its highest level in more than two months at 1.1482. Bulls will need to defend the 1.14 level if the EUR is to remain bullish. Inflation will remain the hot topic of this year and we could see more pressure on ECB chief Christine Lagarde to change tack should inflation continue to creep upwards. ECB will release minutes of its December deliberations on Thursday along with CPI figures which could impact its stance. \
GBP
Sterling had a fantastic run last week despite the political turmoil of the government and its PM Boris Johnson. GBP climbed to 1.375 its highest in nearly 3 months before retreating down to 1.36 late on Friday as USD found demand. This week is set to be a volatile one with multiply data releases that will direct price in the short term. On Tuesday jobs and earnings data will reveal the strength of the UK labor market whilst Wednesday’s CPI figures for December will reveal inflation. At the end of the week, Retail sales will show how resilient the UK high street has been in the face of surging covid cases. All three releases will be key in directing GBP. Politically we can expect more news from No.10 as Operation Save Big Dog’ plans have been revealed. It looks unlikely that the PM will resign and instead we will witness a string of officials being dismissed to save him.
What to watch this week:
TUESDAY, JANUARY 18
GBP – Unemployment Rate (3M)(Nov)
GBP – Claimant Count Change(Dec)
WEDNESDAY, JANUARY 19
GBP – Consumer Price Index (YoY)(Dec)
THURSDAY, JANUARY 20
EUR – Consumer Price Index – Core (YoY)(Dec)
FRIDAY, JANUARY 21
GBP – Retail Sales (YoY)(Dec)
EUR – ECB’s President Lagarde speech