High Impact Economic Data for the upcoming week (All Times GMT+2)
Week Ahead - Jan 19-23
This week the ECB is widely expected to outline the size and shape of the Quantitative Easing program. With the Eurozone struggling for growth and facing the prospect of a Grexit Mario Draghi will likely announce the plan of the ECB to boost the Eurozone economy. Recent reports indicate that the ECB will exclude Greece from the bond-buying process and this has intensified the Greek dilemma. With Greece suffering from 25% Unemployment and a 50% rate of youth unemployment, sub par growth and stifling debts this stance of excluding Greece from the benefits of the QE could push the nation to seriously consider its membership in the common currency.
On Tuesday the main focus will be on Chinese GDP with expectations for a slowdown in growth to 7.2% from 7.3%. The measure of Chinas ‘economic growth has been trending lower after growth peaked at 11.9% in 2007. In Europe German ZEW Economic Sentiment is forecast to increase from 34.9 to 40.1 in a sign that Germany is benefiting from the recent low exchange rate of the Euro. On Wednesday Japanese BOJ Press Conference and Monetary Policy are first on the agenda in Asia while Canadian interest rates are in focus with Overnight Rate and several statements and reports due from the Bank of Canada. On Thursday the most important scheduled event this week arrives in the form of the ECB Minimum Bid Rate and ECB Press Conference. All eyes will be focused on Mario Draghi and markets are anticipating the announcement of the long awaited ECB QE. This outcome has already been priced into the Euro currency over recent months and it remains to be seen if there is further downside in Europe’s common currency. Yesterday a report by Deutsche Bank claimed that based on the Japanese and US experience QE will be unable to rekindle inflation in the EU. Next up on Thursday the US Unemployment Claims are set to show an improvement from 316 000 unemployment claims last week to 301 000 for the new data. Friday brings the week to a close with Manufacturing PMI for the Eurozone and China as well as GBP Retail Sales, Canadian Retail Sales and CAD CPI.
EURUSD 30 Min Chart
EURUSD 4 Hour Chart
Crude Oil 30 Min Chart
Events to Watch this Week
The main factors that will affect the fx markets and trends next week will be the:
- EURUSD made new lows last week at 1.1460 and set a new 12 year low. The downtrend in Euro has intensified in recent weeks and the price level has reached a crucial support line at 1.15. The next direction could set the trend. Will we see 1.20 or 1.10 first?
- Crude Oil set a new low last week at $44.21 and subsequently bounced as high $51.25. The strongest bounce in several weeks improves the outlook for a stronger oil price while new lows could cause panic in oil markets, oil stocks and particularly shale gas companies. Further declines in oil will aid the USD and punish the currencies of net oil exporting counties. Likely to be affected amongst the majors are the CAD and AUD if commodity prices retreat.
- On Sunday the Greek election results will be announced in the battle between pro Euro party Nea Dimokratia versus anti-Euro part Syriza. NK will certainly keep Greece in the Eurozone and continue the bailout schedule, while Syriza is more likely to seek renegotiation of Greece’s debts and potentially exit the Eurozone if it is not satisfied.