Central banks dominate the forex trading agenda this week with the Bank of Japan, Federal Reserve and Bank of England convening for monetary policy meetings. There should be trading opportunities aplenty in stocks and indices, too, as earnings season continues apace. Meanwhile, political stories like Brexit and Donald Trump will remain important for the direction of the markets.

Central Banks

 

First on the central bank calendar is the Bank of Japan, which is scheduled to meet on Tuesday. It’s expected to continue to guide short-term interest rates at -0.1% and the 10-year government bond yield at 0%. But its yield curve control is coming under pressure from rising global bonds, which have been stoked by the expectations of reflationary policies of Donald Trump. Some think it could be forced to raise its yield target sooner rather than later.

Having slumped to its weakest since last February, the yen’s been edging higher over the last month. A notably dovish statement from the BoJ could see the yen’s gains pared.

On Wednesday it’s the turn of the Federal Reserve. We should a much better flavour for how policymakers see the course of rates this year. At present the expectation is for 3 rate hikes in 2017, but sentiment is at the mercy of the new Trump administration and what its plans are for reigniting the US economy.

We’ve seen a notable hawkish shift from the FOMC of late, reflected in the recent comments from chair Janet Yellen: “Waiting too long to begin moving toward the neutral rate could risk a nasty surprise down the road — either too much inflation, financial instability or both.” Markets should expect rate rises to come, but what will that mean for the US dollar? After smashing 14-year highs late last year, it’s since eased off those peaks, which might create an opportunity for dollar bulls.

Finally, on Thursday the Bank of England releases its monetary policy summary and interest rate decision alongside some closely-watched inflation projections. The nine-member Monetary Policy Committee is widely expected to stand pat on rates but rising inflation has started to get traders talking up the possibility that the Bank will raise rates before it cuts them. As such the inflation report could be key for sterling moves after the announcement.

NFP

 

Until we see whether Donald Trump lives up to his pledge to be the greatest jobs creator God ever created, we will have to continue to rely on the monthly nonfarm payrolls report to gauge the health of the US labour market. Friday’s NFP release will be as closely monitored as ever, with a strong payroll figure likely to push the Fed closer to another interest rate rise. Again with the dollar off recent highs there are plenty of opportunities for trading on USD around the release, which is due at 13:30 (GMT).

 

Trump

 

For traders the Donald is the gift that keeps on giving. Utterances on everything from dollar strength to wall building and Nafta were prime drivers of some USD pairs before he even took office. Now he’s in the White House the president’s statements on key policy initiatives will carry even more weight. Tweets about individual companies may also make for some interesting trading opportunities in individual stocks, as we discussed in this recent blog post.

Earnings

 

Finally to earnings and another round of quarterly figures from Wall Street. Facebook and Apple are the headliners, but there is a fine supporting cast in the shape of Pfizer, Exxon Mobil and Visa. Lots of important DAX components are also set to report. Watch for Deutsche Bank, Daimler and Infineon Technologies, which update the market on Thursday.

 

Economic Calendar

(All times GMT)

Monday, 30 January

07:00 – Spain flash GDP

07:00 – Germany import prices

08:00 – Spain flash CPI

10:00 – Eurozone economic sentiment, business climate

13:00 – Germany preliminary CPI inflation

Tuesday, 31 January

00:01 – UK GfK consumer confidence

Tentative –Bank of Japan monetary policy statement

06:30 – Bank of Japan press conference

07:00 – Germany retail sales

08:55 – Germany unemployment data

09:30 – UK net lending to individuals, consumer credit, mortgage approvals

10:00 – Eurozone CPI flash estimates

13:30 – Canada GDP reading month-on-month

15:00 – US CB consumer confidence

21:45 – New Zealand employment change

Wednesday, 1 February

01:00 – China manufacturing and non-manufacturing PMIs

09:30 – UK manufacturing PMI

13:15 – ADP non-farm employment change

15:00 – US ISM manufacturing PMI

15:30 – US crude oil inventories

19:00 – FOMC statement, Federal Funds Rate

Thursday, 2 February

00:30 – Australia exports, imports & trade balance figures

09:30 – UK construction PMI

12:00 – Bank of England interest rate decision, monetary policy summary, inflation report

13:30 – US weekly unemployment claims, preliminary nonfarm productivity

Friday, 3 February

00:30 – Reserve Bank of Australia monetary policy statement

01:45 – China Caixin manufacturing PMI

09:00 – Eurozone final services PMI

09:30 – UK services PMI

13:30 – US nonfarm payrolls, average earnings, unemployment rate

15:00 – US ISM non-manufacturing PMI, factory orders

Earnings Calendar

 

Tuesday, 31 January

Apple (AAPL) – Q1/2017, EPS estimate 3.227

Exxon Mobil (XOM) – Q4/2016, EPS estimate 0.708

Harley-Davidson (HOG) – Q4/2016, EPS estimate 0.311

Pfizer (PFE) – Q4/2016, EPS estimate 0.503

Xerox (XRX) – Q4/2016, EPS estimate 0.250

Ocado Group (OCDO) – Y/2016, EPS estimate 0.732

Wednesday, 1 February

Facebook (FB) – Q4/2016, EPS estimate 1.308

Siemens (SIE) – Q1/2017, EPS estimate 1.670

Thursday, 2 February

Amazon.com (AMZN) – Q4/2016, EPS estimate 1.371

Chipotle Mexican Grill (CMG) – Q4/2016, EPS estimate 0.667

GoPro (GPRO) – Q4/2016, EPS estimate 0.230

Visa (V) – Q1/2017, EPS estimate 0.779

AstraZeneca (AZN) – Y/2016, EPS estimate 4.258

Daimler (DAI) – Y/2016, EPS estimate 8.367

Deutsche Bank (DBK) – Y/2016, EPS estimate 0.843

Infineon Technologies – Q1/2017, EPS estimate 0.163


Source: Bloomberg

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