Last week saw the FED leave rates unchanged as expected whilst maintaining its asset purchases at the current rate. Fed Chair Powell concluded that household spending on goods has moderated whilst the labour market participation continues to remain below pandemic levels weighing on economic activity and job creation. The Fed also outlined that monetary policy is expected to remain accommodative until employment and inflation objectives have been achieved. Market participants will look ahead to the NFP jobs data to provide further insight on the state of the labour market as an additional 55,000 jobs are forecasted to have been added in the past month.
Heading into the week ahead; a positive tone was seen in the Asia-Pac region with most equity indices finishing in the green whilst US equity futures also recovered from the drawdown seen at the reopen where there was some residual pressure following on from Friday’s losses on Wall Street which could be linked to month-end flows, large hedge fund losses and fears of tighter regulation.
In the US, a group of 10 republican senators called for President Biden to consider a smaller Covid-19 relief package than his $1.9tln proposal. The details are set to be outlined later today where senators have stated that the changes should provide more targeted assistance to Americans with the greatest need.
The week ahead will see the Bank of England come into focus as they look to release their monetary policy report and summary later on in the week. Market participants will be keen to keep tabs on any updates surrounding negative rates as the Bank look to outline its plans on involvement of the framework within its policy armoury. Sterling was the top performer amongst the major currencies last month after overcoming Brexit woes running into late last year and leading the way in the vaccine rollout programme across Europe. EURGBP shed over 1% in the month of January as price currently trades at levels last seen last May.
WTI Crude & Cryptocurrency
Looking to the week ahead, commodities were marginally higher which saw WTI Crude initially retreat below $52/bbl. with pressure due to the near-term outlook for the commodity looking bleak amidst tighter lockdown restrictions. Gold continued to trade rangebound last week with safe haven demand capped by firmer gains in the greenback. At the time of writing, the asset stands above the $1,850 level with near term resistance at $1,875/oz. In the cryptocurrency space, BTCUSD continued to find support around $30,000 as market participants eye remain poised for another attempt at the all-time highs
Here is a breakdown of the High impact data releases this week.
15:00 ISM Manufacturing PMI. Markets to watch: USD Crosses
03:30 RBA Rate Statement. Markets to watch: AUD Crosses
21:45 Employment Change q/q and Unemployment Rate. Markets to watch: NZD Crosses
12:00 BOE Rate Decision and Monetary Policy Summary. Markets to watch: GBP Crosses
13:30 BOE Gov Bailey Speaks. Markets to watch: GBP Crosses
22:30 RBA Gov Lowe Speaks. Markets to watch: AUD Crosses
13:30 Employment Change & Unemployment Rate. Markets to watch: CAD Crosses
13:30 NFP. Markets to watch: USD Crosses
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