What Will the Markets Focus on This Week?

GKFX Team  |  February / 1. Week
It was an incredibly busy week last week for economic data with central bank meetings from the Bank of Japan, Bank of England and of course the Fed later in the week. Add this to the fact that we have also seen the US jobs report and yet more headlines from US President Donald Trump and you can see it’s been a busy week.

Earnings have also take centre stage with two of the FANG stocks reporting their Q4 earnings, with Apple and Facebook both beating expectations comfortably. However the strong performance in earnings has not been able to hold up the major equity markets as the Dow and Dax have both dragged US and European indices down for the week.

It was a busy week on the currency markets as well as the pound was yet again in focus as the UK parliament unanimously voted to trigger article 50 by the end of March and start official negotiations with the EU over Brexit. The move saw GBPUSD stay well above the 1.2400 lows, but well off the 1.2708 highs for the week. The fact that cable finished well off of the weekly highs will disappoint the Bank of England governor Mark Carney after he revised higher the UK growth forecast for 2017 to 2%, but poor PMI readings throughout the week also took its toll with construction, manufacturing and services all coming in weaker than expected.

The greenback is yet again in focus as President Trump continues to make headlines around the world, however last week has seen a slowdown in executive orders. In fact the headlines around Trump have not been bought by himself, worldwide protests over his ban on certain Muslim countries as caused global condemnation, forcing the White House to backtrack somewhat.

Against the Euro we have seen a continuation of the upside for the single currency, more down to the weakness that US dollar has continued to find. Highs for the week at 1.0830 will remain the firm upside level for us going into the new week, while a test of the trendline on the downside of the daily chart is the next key level.

3 Things to look out for this week?

1. Big Earnings Releases

During earnings season we company reporting’s are enormous news and will of course move the major indices as well as the company stock. However don’t be fooled just because you trade EURUSD or the FTSE that you are immune to a release of earnings from the likes of Amazon or Exxon Mobil. These reports can drive sentiment in equity markets of course but the story they tell about the strength of the economy can also mean that have a knock on effect on the currency.

We may have already had the major FAANG stocks out of the us (Facebook, Amazon, Apple, Netflix and Google), but there is of course potential for knock on market movements from the rest of the stocks reporting, not least those big companies that start to report out of Europe.

2. Economic Data

This is a contentious one for this week as really there is a severe lack of any kind of big data out this week. However it may well be last week’s data that we still have to decipher after a much stronger than expect Non-Farm Payroll reading. The NFP came in at 227K vs the 175K that was expected previously, however the jobs report missed expectations on average weekly earnings and saw the unemployment rate jumped to 0.1% vs the jump of 0.3% that was expected. On Friday Donald Trump welcomed the jump in the NFP, while obviously ignoring the other two readings. This week things are particularly quiet with only the RBNZ taking centre stage throughout the week.

3. More President Trump headlines

Last week the President took a step back from the limelight and left the protestors to rally the nation around him this time. The headlines are not just in the US as the focus is also here in the UK with protests, this time around President Trumps state visit to the UK.

One thing that is becoming a theme is that he tends to hold some kind of photo op and lets the media know his plans for the day. We would also have to look out this week for any more comments about rolling back of the Dodd-Frank regulation on the financial services industry. Last week President Trump signalled his intention to roll back a lot of the legislation in order to let small business borrow more freely once again. We know whatever the topic, there is likely to be headlines from Donald Trump in the coming week.

Highlights
  • Last week’s NFP will be a key discussion point for the new week as many start to speculate around the next Fed rate hike.
  • Be aware of comments from President Trump that could move the markets (don’t forget Twitter)
  • There is a lack of economic data this week, but keep an eye on the secondary data.
  • Corporate earnings from Europe as well as the US are due for release.

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