The Federal Reserve System believes that the largest economy in the world continues to move forward, but market participants obviously think otherwise. Fears about growth prospects knock down stock prices from record levels. Yes, the labor market is stable, wages are growing, which in the future will push inflation above the target of the Fed. In addition to the beginning of the reporting season of the largest US companies that can support the dollar, or vice versa, to weaken it, there will also be very significant macro statistical data.
In Europe, the first two days of the beginning week will attract attention to the voting of the British parliament on the Brexit deal. The releases of industrial production volumes on Monday, the balance of trade on Tuesday, and the report on inflation in the EU on Thursday, will all be important news.
For the US, important releases will begin on Tuesday. After the opening of the US trading session, the US trade balance will be known. Since negotiations on a trade dispute between the United States and China have already begun, and the Middle Kingdom has taken reciprocal steps, the negative balance of the United States is expected to be reduced. Also released data on the volume of imports/exports of the United States of America. On Tuesday evening, the producer price index will be revealed.
Wednesday will be one of the most important days for the US dollar this week. As per usual, from 16:30 Moscow time, important releases such as the basic retail sales index, import/export price indices, and retail sales volumes will begin. Later in the evening, the Federal Reserve will publish its “Beige Book”, from which we will learn about the nearest plans of the American regulator.
On Thursday, the US real estate sector will report on the issued building permits, the volume of new home construction and sales of new housing. The Federal Reserve Bank of Philadelphia will publish an employment index in its state.
The week will end with industrial production in the United States of America, and the University of Michigan will publish consumer indices and consumer indices. In general, the week will be very interesting, and given the beginning of the reporting season of the largest American companies, it is saturated as well.
GBP / USD
Less than 80 days are left until the UK leaves the EU, and on Tuesday Brexit will approach a critical intersection. It was on Tuesday that the British parliamentarians will vote on their Prime Minister Theresa May’s deal to withdraw from the Euroblock. This agreement, according to EU leaders, is not subject to revision and is the only available. Market participants, many analysts and experts expect that this agreement will be rejected by the British Parliament, which in the end, will lead to uncertainty and, most likely, to Brexit without any deal closure.
Given the fact that market participants are already laying negative, due to the rejection of the Brexit deal by the London Parliament, the fate will depend on the chosen path. If the release dates are not postponed, which, in fact, will remain the only positive, the sale of the British pound shooter will continue.
Of course, the most important thing this week will be the vote of the British Parliament, but the macro statistics cannot be ignored. On Wednesday, there is data on the state of inflation of the United Kingdom and the purchase price index. On Friday, there will be a release on retail sales, the base index and volumes.
This week, attention will be focused on the volume of stocks of raw materials in the United States and the formation of demand for raw materials. Last Friday, Baker Hughes reported a 4-unit reduction in the number of rigs in the US, a bullish factor for black gold. However, China’s import/export fell in December, China’s weakest foreign trade statistics since 2016. Beijing has reduced investment in the United States and Europe by 73%, which is the lowest level in six years.
The current situation gives advantages to the American side in negotiations on a trade dispute. The trade war comes to a halt, and the first positive signals are visible on the horizon. However, trade disagreements that lasted just over six months are paying off. China demonstrates the strongest slowdown in the economy, which in the future will significantly affect the demand for energy resources.