Weekly trading forecast January 28 - February 1.

What a week is expected in the financial markets! The reason is not in the fact that it’s the fourth week of the new year and the last week of January, which is crucial for the long-term technical analysis. It’s not only about traditional economic reports, although GDP and inflation figures are extremely important for several major regions. It’s even not about the Brexit vote in the British parliament, which could lead to a bullish breakthrough and long-term uptrend in all sterling pairs. It’s about FOMC monetary policy statement and NFP report in one single trading week! The two last trading weeks were comparatively quiet with low volatility and trading volume, promising a silence before the storm. The mixture of macroeconomic, political and monetary events is going to bring a real roller coaster to traders, so don't forget to put on your helmets before opening trading terminals this week!

Monday, January 28.

The Asian trading session is expected to be comparatively quiet unless something crucial happened during the weekend. Australian traders will be off due to the Australia Day celebration. Nonetheless, the Bank of Japan will publish its monetary policy meeting minutes which might affect the price action in Yen pairs. European M3 Money Supply and Private Sector loans reports are the only significant events for EUR/USD. The British pound might be significantly influenced by weekend’s updates about the upcoming Brexit vote in the Parliament. GBP/USD could continue its bullish rally in case if political parties confirmed the readiness to support Prime Minister Theresa May’s PLan B for soft Brexit. The US economic calendar is almost empty with the only exception of short-term bill and 5-year Note auction, a result of which could affect the fixed-income market and precious metals.

Tuesday, January 29.

Tuesday is going to be a huge day for commodity currencies. New Zealand Trade Balance is scheduled to release and expectations are quite modest so far. If imports and exports figures were able to surprise investors on the positive side, then we’d see the Kiwi soaring versus the US dollar and Japanese Yen. Otherwise, a deep pullback might take place. The Australian dollar will be vulnerable to NAB BUsiness Survey and Business Confidence Index. AUD/USD failed to break 0.7000 round-figure resistance last week and that would be a second test if data was positive. French Consumer Confidence, Italian PPI and Spanish unemployment rate aren’t the most important reports, so their impact on EUR/USD might be limited. Tuesday is also the day of British Parliament vote for Brexit deal (tentative), and pound traders will monitor every single headline very carefully. If the vote passed, GBP/USD might fly sky-high in a blink of an eye. The same forecast could be implemented for GBP/JPY, while EUR/GBP could react in the completely opposite direction. Goods trade balance and CB Consumer Confidence are due to release at 01:30 and 03:00 PM GMT, respectively. The US dollar should be very vulnerable to those reports, as the US government shutdown caused the delay of many macroeconomic reports in January. It’s also important to get the latest data for the Federal Open Market Committee which will gather the next day for the interest rates decision and monetary policy statement.

Wednesday, January 30.

That’s going to be a huge day for all of the regions. The Asian trading session will be affected by Australian CPI and Japanese Retail Sales reports. French GDP, German Consumer Confidence and CPI and European Consumer Spending and Industrial Production - those are the headline events during the European trading session. The British pound will still be influenced by the Brexit vote and an upcoming Nationwide HPI report which is tentative. German and Italian government 10-year bond auctions could add fuel to the fire. But the real volatility will come later on Wednesday. New York will open the trading session with two important reports: ADP Non-Farm Employment change and the final reading of US GDP in the fourth quarter of 2018. Nervous traders should stay out of their trading terminal during that time, as lots of whipsaws are expected. The US dollar index might drop sharply if the GDP report was revised down compared to the latest 2.5% result. There is also GDP Price index to be published at the same time and FOMC members will monitor that report very closely in the scope of inflationary pressure. Pending Home Sales report would be ignored due to the importance of other events. Oil traders will stick to their screens to see the US Crude oil inventories report. So far, it’s expected at the level of 4Million barrels but any change would significantly influence the price of oil. And that’s not the end. The Federal Open Market Committee will publish interest rate decision and monetary statement at 07:00 PM GMT. The Federal Reserve Chairman Jerome Powell announced that every single rate decision will be followed with a press conference, so stay with us for further updates about the exact time of the press conference. No change is expected in the financial conditions so far, but the details of the monetary statement might have a huge impact for the greenback not only for this week but also in the medium-term perspective. US Stock indices will have enormous volatility as well. Equities investors will try to get a clue about the future financial conditions in the world’s leading economy.

Thursday, January 31.

The active price action will resume in Tokyo on Thursday with BoJ Summary and Industrial Production report for December. AUD traders will watch the Export Price Index and Private Sector Credit. But the key event will take place in China: Manufacturing and Non-Manufacturing Purchase Managers Indexes will be released. That will be crucial for all of the high-risk assets and emerging markets. USD/JPY currency pair will be influenced by the Bank of Japan Deputy Governor Amamiya’s speech at 01:30 AM GMT. The European trading session is also full of important events: German Unemployment change and Retail Sales, French and Spanish CPI. But the headline event is the GDP report in the European Union. Given the importance of FOMC meeting on Wednesday, EUR/USD would be extremely volatile throughout Thursday as well. In the United States, Core PCE price index and PCE deflator will be published. Both reports are even more important than traditional CPI and PPI, so the volatility will keep weighing for all of the financial markets. Canada will publish GDP report and USD/CAD should gain more strength if the data was in favour of that scenario. Bank of Canada Governor Council Member Wilkins will host a press conference on monetary policy update.

Deputy Governor Amamiya’s
Source: Reuters


Friday, February 1.

The vast majority of traders will be expecting Friday’s US NFP report, so the volatility might ease somewhat before that. Nevertheless, such reports will be published as the Unemployment Rate in Japan, PPI in Australia, Caixin Manufacturing PMI in China, Retail Sales in Switzerland, Manufacturing PMI in Spain, Italy, Germany and France, CPI in the European Union. That's more than enough to turn any day upside down, isn’t that? But the main event of the week is the US Non-Farm Payrolls Report, anyway. The headline figure is expected to be published in the range of 140/180K jobs added in January. Some of the analysts predict that it will be much higher - up to 300K. On the other side, the US government shutdown could not have a positive impact on the Labour market, so such a huge number would be a shocking surprise and US dollar will soar. Anyway, anything around 200K is also very positive. Average Hourly Earnings and Unemployment rate will be monitored closely as well.
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