Despite excitement about the new US stimulus package, Coronavirus concerns remain in play for the global market.

Weekly market report for the week ahead

Week starting 08-02-2021


USD

  • After a strong first half of the week, the greenback struggled on Friday.
  • When risk sentiment improved, it gained against the EUR and NZD, while losing against the GBP and AUD. This week, there are a number of releases that could impact the US Dollar.
  • Inflation data is due out on Wednesday, the Fed’s monetary policy report is being released on Thursday and traders should keep an eye out for any progress with Biden’s stimulus package.

EUR

  • Without much to move the Euro, it lost ground against counter-currency strength.
  • It looks like it could be another quiet week for the Euro following the slew of data due out on Tuesday.
  • German industrial production should climb by 0.1% for December, while Germany’s trade balance surplus should narrow to EUR 15.8 Billion.
  • Italy’s industrial production should rebound by 2.1% on Tuesday, after falling by 4.1%.
  • Updates on the vaccine rollout in Europe should dictate price action this week.

GBP

  • The British Pound got off to a slow start but ended up being one of the best performing currencies of the week after the Bank of England (BoE) toned down expectations of negative interest rates with Monetary Policy Committee (MPC) members looking optimistic for the recovery of the UK economy.
  • There are not many top tier reports due out for the UK this week, but the bulls will be hoping to extend the GBP’s rallies with the preliminary fourth quarter Gross Domestic Product (GDP) data, and industrial production – which is due out on Friday.
  • It will largely be counter-currency action that will move the Pound this week.

ZAR

  • The South African Rand continues its rally, despite the resumption of load shedding ahead of this week’s State of the Nation Address (SONA).
  • Thursday will see the annual opening of Parliament as President Cyril Ramaphosa looks set to update the country on the current political and socio-economic state of the nation.
  • In addition to SONA, mining, gold and manufacturing production numbers are due out on Thursday. We expect the address from Ramaphosa to drive intraday Rand pairs.
  • Talk of delaying the vaccine rollout due to the AstraZeneca vaccine’s “minimal protection” against the second variant should also weigh on the Rand.

AUD

  • The Australian Dollar takes the spot at the top of the podium once more, despite a rather bearish reaction to the extended quantitative easing programme from the Reserve Bank of Australia (RBA).
  • The Aussies will not be printing anything major this week, which means that the AUD trends are likely going to depend on counter-currency movement and overall risk sentiment.
  • We do expect that AUD traders will price in the significant change in the price of iron ore, one of Australia’s largest exports.

NZD

  • The Kiwi Dollar ended up in the red against most of the majors despite getting off to a strong start with better-than-expected employment data.
  • Much like its Australian counterpart, New Zealand did not have much to release in terms of ground-breaking data.
  • This will leave them vulnerable to risk sentiment and counter-currency action. The better-than-expected data from last week, and expectations of a less dovish statement from the Central Bank, should make the Kiwi Dollar a more attractive bet than the other comdolls.

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