Weekly Outlook: Jan 25 - 29

We head to the last week of January with Fed’s policy meeting on the Economic Calendar. It is the first meeting after the historical interest rate rise. The previous week, the U.S. dollar was traded mixed versus the other G10 currencies in the absence of market-driver news. The euro was broadly lower against its major peers as the ECB President Mario Draghi kept a very dovish stance and tried to prepare the market for further easing in two months from now.

[B]Today[/B], the IFO Survey will inform us for the German Business Climate, Current Assessment and Business Expectations in January. The Business Expectations and the Business Climate are expected to decline to 104.1 from 104.7 and to 108.5 from 108.7 before while the Current Assessment is expected to remain stable at 112.8. The German Buba Monthly report will provide us with more details for the current and the future economic conditions for the Deutsche Bundesbank’s view.

On [B]Tuesday[/B], the only notable macro updates are the BoE Governor speech and some figures coming out from U.S. In the morning, the BoE Governor Mark Carney will speak at the treasury select committee hearing while the financial stability report will be out.

In U.S., the Case-Shiller Home Price Indices for November will be released as well as the Housing Price Index for the same month. The preliminary Markit Services PMI is expected to come out 54.3 as the month before while the consumer confidence for January is expected to rise up to 97.0 from 96.5 before.

Overnight, in Australia, December’s Westpac Leading Index will be released as well as its inflation rate for Q4. On an annual basis, the consumer prices are forecasted that had rose by 1.6% in the fourth quarter from 1.5% prior.

Early on [B]Wednesday[/B], February’s Gfk consumer confidence for Germany will be out. In UK, the BBA Mortgage Approvals for December will be out. Going to U.S., the[B] Fed Interest Rate Decision[/B] will hog the limelight. The market hangs on every word of the monetary policy statement to decipher when the second rate hike will be. After the dovish messages, I wouldn’t expect another rate hike in this meeting.

Later in the day, the Reserve Bank of New Zealand will also have a policy meeting to review its main interest rate which is not expected to change from 2.5%. However, I would expect the monetary policy statement to have an impact on the domestic currency. The detailed Trade Balance will be also out a while after the policy meeting.

On [B]Thursday[/B], the preliminary British GDP for the fourth quarter is forecasted to show a slower growth of 1.9% from 2.1% year-over-year.

In Eurozone, the sentiment indicators from different sectors are expected to show a decrease or a stability of the optimism in the Eurozone. In Germany, the preliminary inflation rate for January is expected to have increased to 0.5% from 0.3% before. On the second half of the trading session, the Durable Goods Orders for December are scheduled for release for which the market expects a decrease of 1%. The pending home sales are also coming out.

During the night, the japan employment and inflation report are coming out. The consumer prices are expected to rise by 0.2% in December, lower than 3% before. The unemployment rate is anticipated to remain steady at 3.3%. The flash Japanese industrial production for December will improve to -0.3% from -0.9% the month before. A few hours later, the Bank of Japan will have its policy meeting. No changes are expected to the interest rates but the press conference will follow will attract some attention.

On [B]Friday[/B], the traders’ attention is turned to U.S. and Eurozone. In Eurozone, the flash inflation rate for January is coming out and is expected to rise up to 0.4% from 0.2% the previous month. In US, the flash GDP growth for Q4 will be released. The quarter-over-quarter figure is forecasted to reveal a growth of 0.8% from 2.0% before.