The Weekly Wrap Up, the Loonie and Brexit

It was a busy start to the week ahead of a particularly busy end to the week. Expect plenty of moves as the markets digest a heavy economic calendar.
Bob Mason
Light Board

After a busy first half of the week on the Economic Calendars, what can we expect for the rest of the week and is there anything specific we should be looking out for?

It’s a busier 2nd half of the week.

On Thursday, Eurozone consumer confidence figures are due out after the ECB delivers its first monetary policy decision of the year.

Any updates on the ECB policy framework and revisions and outlook towards growth will remain the key drivers, with the ECB expected to stand pat on policy.

The focus will then shift to a busy Friday. Key stats include prelim private sector PMI numbers out of Japan, the Eurozone, the UK, and the U.S.

For the Eurozone, the markets will be looking for improved numbers to support the ECB’s view that private sector activity had bottomed out last year.

Following a string of weak numbers for the Pound, service sector activity will need to provide support.

Expect the markets to also zoom in on U.S service sector activity late in the day.

For the Kiwi Dollar, 4th quarter inflation numbers are due out, with inflation numbers also due out of Japan.

The RBNZ is expected to hold on policy near-term, so the inflation numbers will need to support that.

For the Bank of Japan, the BoJ delivered a more optimistic outlook on inflation and growth. This would need to be reflected in Friday’s stats.

Finally, the Loonie and retail sales figures out of Canada will also be in focus.

It was a big day for the Loonie on Wednesday, with the BoC opening the door to a rate hike. What can we expect over the rest of the week?

We saw the Bank of Canada open the door to a rate cut on Wednesday. The BoC Governor had previously stated that interest rates were at the right level to support the economy.

Recent GDP numbers suggested otherwise, forcing the BoC to change tact.

The BoC noted that growing slack in the economy threatens to dampen inflationary pressures.

While concerns over household debt levels left the BoC in pause mode, a rate cut will come should the current economic slowdown persist.

That makes the Loonie all the more sensitive to November retail sales figures due out on Friday.

The date for the UK leaving the EU is almost upon us. What data is coming out of the Eurozone? And what effect is it having on the pound?

For the Pound, employment numbers on Tuesday delivered a much need boost.

It may not be enough to prevent a BoE rate cut next week, however.

Much will likely depend on January’s prelim private sector PMI numbers due out on Friday.

A contraction in the services sector could be the green light for the BoE to make a move next Thursday…

Not much happening in terms of the Aussie and the Kiwi, can we expect any movement in the 2nd half of the week?

There are no further stats due out of Australia to provide the Aussie with direction.

In spite of the bushfires, employment figures for December gave the Aussie a boost on Thursday. The boost did come from part-time employment, however, which could reverse in the months ahead.

It remains to be seen whether it’s enough to allow the RBA to stand pat next month.

Consumer confidence eased in January and should we see consumer spending slide, a rate cut would remain likely.

For the Kiwi Dollar, we’ve got 4th quarter inflation numbers due out on Friday morning. Forecasts are Kiwi Dollar positive.

That would then support the outlook on RBNZ monetary policy, which is status-quo.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US