The European Central Bank held its first meeting of the year last week and it spoiled moods on the markets as Mario Draghi confirmed that the macroeconomic environment is worsening and that growth is likely to slow. Similar message was sent earlier by Fed when central bank suggested it is likely to slow monetary tightening process. Investors will have a chance to see whether something has change this week. Data releases from Europe and the United States round up weekly calendar. Apart from that, politics will continue to impact assets around the world.
While no major data releases are scheduled for Monday, investors should keep in mind that as the US government reopened federal agencies will start publishing delayed figures. Timing of the postponed data releases is subject to each agency’s own judgement.
Central bank speakers scheduled for today:
8:45 am GMT - ECB’s Nowotny
11:30 am GMT - Riksbank’s Jochnick
2:00 pm GMT - ECB President Draghi
2:30 pm GMT - BoE’s Carney, Broadbent, Ramsden
Major US companies reporting earnings today:
Reinsurance Group of America (RGA.US)
What to watch for the remainder of the week?
FOMC meeting (Wednesday, 7:00 pm GMT) and NFP report (Friday, 1:30 pm GMT)
2019 marks beginning of a somewhat new era for the Federal Reserve. This is because post-meeting conference will be held after each meeting starting from this year. As the global economy is heading for a slowdown, more communication from the world’s most important central bank is more than desired. Investors will look for updates on how Fed aims to maintain price stability and high employment amid all the economic uncertainty. Speaking of labour, NFP report will be released on Friday. Wages growth is expected to maintain strong pace of 3.2% YoY while employment change should moderate below 200k. Affected markets: GOLD, TNOTE.
Politics: Brexit vote (Tuesday), US-China trade talks (Wednesday-Thursday)
Some high profile political events are also scheduled for this week. The UK parliament will vote on amendments to Theresa May’s Brexit deal on Tuesday, 29 January. Odds suggest that the Prime Minister is likely to face another defeat. However, reports surfaced recently saying that the Democratic Unionist Party from Northern Ireland may back Brexit agreement. Elsewhere, negotiators from the United States and China will meet in Washington on Wednesday and Thursday for the next round of trade talks. Statement on progress may be released after the meeting therefore investors should stay cautious on Thursday. Affected markets: GBPUSD, AUDUSD.
European CPI inflation (Friday, 10:00 am GMT)
Last week’s post-meeting press conference of the ECB President Mario Draghi spoiled moods among EUR traders. European central banker said that the balance of risks for the euro area economy became tilted to the downside. As central bankers are usually reluctant to state clearly that deterioration is coming such line can be seen as a warning sign. Having said that, the first ECB rate hike in years is distancing further away with little scope of improvement in the months to come. Nevertheless, preliminary inflation reading for January may turn to be a trigger for short-term price swings across European markets. Affected markets: EURUSD, DE30.
EURUSD managed to break back above the 50-session moving average on Friday thanks to the USD weakness. The pair is likely to remain in the spotlight this week due abundance of data releases and political events. Source: xStation5