This led to a bid on risk assets as market participants expect a slower pace of policy from the US Federal Reserve (Fed). According to CME’s FedWatch Tool, based on Fed Fund futures contracts, the market is all buying a 25 basis-increase for the next Fed meeting on February 1, the move to raise the Federal Funds rate to 4.50% – 4.75%.
In the markets, most US equity indices led to another week of positive gains (S&P 500 up 2.7%) amid strong US inflation numbers and early the Q4 earnings on Friday, focused mainly on this bank. JPMorgan Chase & Co beat quarterly expectations, while Wells Fargo & Co fell short. In addition to the statement in the same space of the general view of the FAANG index, which posted a muscular week of gains. Amazon pushed 14.0% higher, followed by Netflix at 5.47%.
The leading players on the currency market (majors) are EUR/USD, AUD/USD and GBP/USD, up 1.78%, 1.48% and 1.15%, respectively. Late in the week USD/JPY, down an eye-popping 3.17% and USD/CAD, down 0.35%.
Week Ahead?
It seems that it will be weaker than usual on Monday because not only the economic calendar is quite light, American banks will close their doors in celebration of the Martin Luther King Jr. Day. However, Tuesday will certainly offer a more optimistic environment, starting with the annual growth rate (GDP) for China for Q4 at 2:00 am GMT, followed by the UK Claimant Count for December at 7:00 am GMT and Germany’s ZEW Economic Sentiment Survey at 10:00 am GMT. US hours will see the latest Canadian inflation data at 1:30 pm GMT and the US New York Manufacturing Index. We also see earnings from Goldman Sachs and Morgan Stanley during the market.
Early on Wednesday there will be a change in the interest rate decision of the Bank of Japan (BoJ) at 3:00am GMT. The agreement towards the end of the price is that the central bank will maintain its interest policy at -0.1%, although expectations are growing for a policy review this year. Soon after the annual inflation rate for the UK for December at 7:00 am GMT, expected to settle at 10.6% (median forecast), with The main inflation rate is expected to remain unchanged at 6.3%.
The Bank of England (BoE) is set to meet the day after the Fed meeting on February 2, with markets currently expecting the central bank to raise the Bank Rate to 50 basis points, a move that raises the target rate to 4.00%. Finally, Wednesday’s markets will also be attracted to the US retail sales and Producer Price Index (PPI) data at 1:30 pm GMT.
Thursday welcomes Aussie employment data for December at 12:30 am GMT, followed by US housing data (December) at 1:30 pm GMT and US general unemployment data for the week ending January 13. Also of note on Thursday, Procter & Gamble (hours before the market) and Netflix (hours after the market) announced their latest quarterly earnings results. .
Friday around the week and look at retail sales from the UK for December and Canada for November at 7:00 am GMT and 1:30 pm GMT, respectively.
