Going into the week ahead, Japan’s economy expanded by more than expected in the fourth quarter, further extending the recovery from its worst recession post war. As a result, the Nikkei 225 finished the session up close to 2% breaking through the 30,000 handle; marking the first breach of the level in more than three decades. Company shares have continued to report positive earnings and with the nation also set to start vaccinations later on this week, it bodes well for market participants and investors. Conversely the Japanese Yen was amongst the weaker currencies starting the session this week as an upbeat risk tone swept across markets on growing optimism surrounding the Pandemic. Flows into safe havens were capped as Gold also remained subdued on lack of haven demand; prices have since retreated from the $1,850/oz level which was tested last week.
Sterling continues to outperform amongst its major counterparts given the positive sentiment circling the nation. Going into the week ahead, PM Johnson announced that the nation has surpassed the 15mln milestone in vaccinations signifying a major turning point in the countries’ battle against Covid-19. Given that a large proportion of its most vulnerable citizens have now been vaccinated it opens up the roadmap for easing the lockdown where plans will be unveiled on the 22nd of February. At the time of writing, cable trades above the 1.3900 handle for the first time since April of 2018. Appetite for risk can also be seen within GBP/JPY which has now broken through 145.00 and trades at highs last seen in the latter part of 2019.
Cryptocurrency markets continued their ascent with a number of altcoins benefiting from the flow of funds and fundamental buzz which saw Bitcoin Cash gain over 60% in the past week. LTC/USD also broke to the upside after gaining some 40% in the past week to move to multi-year highs as price broke through the $200 handle. Bitcoin remains propped up by fundamentally driven catalysts and currently trades around $48,000.
Oil markets continued to rally to yearly highs as market participants continued to digest positive sentiment for the commodity complex. WTI is now up around 25% for the year after price pushed above the $60 level earlier in the session. Looking to the week ahead, Russian Deputy PM Novak believes that the Oil market is on a recovery path and forecasts prices between $45-60/bbl. for the year.
Here is a breakdown of the High impact data releases this week.
13:30 Core Retail Sales & Retail Sales m/m. Markets to watch: USD Crosses
00.30 Employment Change & Unemployment Rate. Markets to watch: AUD Crosses
07:00 Retail Sales m/m. Markets to watch: GBP Crosses
08:15 – 08:30 French Flash Services PMI, German Flash Manufacturing & Services PMI’s. Markets to watch: EUR Crosses
09:30 Flash Services PMI. Markets to watch: GBP Crosses
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