As we step into a new week, the global financial markets are bracing for an array of economic events that could significantly sway various currencies and commodities. From key data releases to central bank leaders’ speeches, every announcement can potentially trigger a shift in market sentiment.
The World Economic Forum Annual Meetings
The upcoming week is set to be a whirlwind of activity with the commencement of the 54th Annual Meeting of the World Economic Forum (WEF). Held in Davos-Klosters, these meetings bring together leaders from government, business, and civil society to discuss and strategize about global economic policies. As these meetings can significantly influence currency values, they are a vital event for currency traders worldwide.
Central Banks Leaders’ Remarks
Throughout the week, several central bank leaders are expected to make remarks that could potentially sway various currencies. These statements often hint at future monetary policies and provide insights into the economic health of their respective countries, thereby impacting currency rates.
Tuesday, 16th January 2024: Important Events and Data Releases
On Tuesday, we have the release of Britain’s Claimant Count Change and Average Earnings Index 3m/y data. These figures indicate the state of the UK job market and could affect the value of the pound. The remarks from the Bank of England Governor Bailey will also be closely watched for any indications of changes in monetary policy.
Moreover, Canada’s Consumer Price Index (CPI) data will be released. As it reflects inflation trends, this data could have an impact on the Canadian dollar. In the US, the Empire State Manufacturing Index, which provides insights into the manufacturing sector’s health, could influence the value of the US dollar.
Wednesday, 17th January 2024: Key Economic Indicators
China’s Industrial Production y/y data will be released on Wednesday, shedding light on the growth rate of the country’s industrial sector. This data could potentially affect the value of the yuan. Meanwhile, Britain’s CPI y/y data will offer another key indicator of inflation trends in the UK.
In the US, Core Retail Sales m/m and Retail Sales m/m data will offer insights into consumer spending patterns, which could influence the US dollar. Traders will also be keenly monitoring the remarks from European Central Bank President Lagarde for any hints of changes in the Eurozone’s monetary policy.
Thursday, 18th January 2024: Market-Moving Events
Australia’s Employment Change and Unemployment Rate data will be released on Thursday, indicating the health of the country’s job market. This could potentially impact the Australian dollar. Swiss National Bank Chairman Jordan’s remarks and comments from FOMC members could influence the Swiss franc and the US dollar, respectively.
In the US, data on Unemployment Claims, Building Permits, and the Philly Fed Manufacturing Index will be released, potentially affecting the US dollar.
Friday, 19th January 2024: Economic Data Releases
Friday will see the release of Britain’s Retail Sales m/m data, indicating consumer spending trends. This could influence the pound. Canadian Core Retail Sales m/m and Retail Sales m/m data could similarly impact the Canadian dollar.
In the US, Prelim UoM Consumer Sentiment, Existing Home Sales, and Prelim UoM Inflation Expectations data will be released, potentially affecting the US dollar.
Bitcoin ETF Approval and Its Aftermath
The previous week saw approval for a Bitcoin ETF, which initially led to an increase in Bitcoin prices before falling back below $43K. The excitement around the ETF seems to have quickly faded. However, altcoins have rebounded. Some analysts have turned bearish and are projecting Bitcoin targets of $25,000. Bitcoin’s price movements have been erratic recently, with a failure to sustain prices above $48,000 leading to a sharp fall. Although buyers managed to defend the support line, they failed to trigger a significant recovery, suggesting ongoing pressure from bears.
Forex News Update
EUR/USD Pair: A Struggle at 1.0950 Amid Rising US Dollar
The EUR/USD pair is struggling to maintain its gains in European trading on Monday, as the US Dollar rebounds alongside US Treasury bond yields. With a lack of significant economic data and a holiday in the US, market sentiment is likely to be a key factor in today’s trading.
EURUSD Daily Chart
Quiet Trading Day for EUR/USD with US Holiday
The EUR/USD pair is experiencing a quiet trading day, with limited changes around its daily opening. The absence of significant economic data and a US holiday contribute to this subdued trading. Investors are taking cues from stock performance, with European indexes currently experiencing losses. Despite initial optimism due to expected US Federal Reserve rate cuts, stock markets have lost momentum.
German Data and Eurozone Trade Balance
In terms of data, Germany has released the December Wholesale Price Index, which saw a 0.6% MoM decrease. The Eurozone Trade Balance showed a surplus of €14.8 billion in November, while Industrial Production declined by 6.8% YoY in the same month, a greater fall than predicted.
GBP/USD Pair: A Downward Trend Towards 1.2700
The GBP/USD pair is trending above1.2700 in Monday’s American session. The US Dollar is seeing renewed demand as US bond yields rise, despite the holiday-thinned market conditions. Increasing risks of a UK recession and geopolitical tensions are further pressuring the pair.
GBPUSD Daily Chart
Gold Prices Nearing Weekly High Amid Macroeconomic and Geopolitical Influences
Gold prices are nearing their weekly high, supported by various macroeconomic and geopolitical factors. Expectations of Fed rate cuts are increasing, while concerns about persistent US inflation are subsiding following a surprisingly soft PPI report. Heightening Middle East tensions are boosting the appeal of safe-haven assets like gold.
XAUUSD Daily Chart
Sideways Drift for DXY US Dollar Index
The DXY US Dollar Index is drifting sideways as markets remain cautious about any changes in the balance of various geopolitical hot topics. The strength of the US Dollar is waning slightly as not all US economic data continues to surpass estimates, with several indicators beginning to show contraction, even though US labor data remains robust. Traders are observing a holiday in the US, awaiting US Retail Sales and University of Michigan Consumer Sentiment data later this week.
Oil Prices Retreat Despite Geopolitical Tensions
Oil prices are continuing to retreat despite various geopolitical tensions. Traders are choosing to overlook these tensions due to their current lack of impact on oil supply. The key risk event is potential action or retaliation from China following the election outcome in Taiwan, where the ruling Democratic party won with its demands for greater sovereignty and independence.
Current Crude Oil Trading Rates
As of writing, Crude Oil (WTI) is trading at $72.27 per barrel, while Brent Oil is trading at $77.61 per barrel.
Crude Oil WTI Daily Chart
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