FX Market Overview for February 2, 2021
February started on an optimistic note; Monetary and stock markets recovered after the loss of the previous month. The first week will be very rich: the publication of the Eurozone GDP indicator for the 4th quarter, ISM activity indexes, employment reports in the United States, Canada and New Zealand, and the Bank of England will have to decide on the rate. Wall Street is still trying to cope with the consequences of a short Gamestop compression (NYSE: GME). In fact, the battle between hedge funds and private investors is now in the silver market, AMC Entertainment shares (NYSE: AMC) and other assets.
As for the US dollar, at the moment the situation is controlled by "bulls"; The USD / JPE pair came to the mark 105. USD strengthened with respect to all major currencies, despite the relatively weak ISM report on the production sector. In January, the growth of production activity slowed down, as evidenced by the decrease in the index from 60.5 to 58.7. However, the growth of the component of paid prices is a sign that inflation is growing. Despite the second Pandemic wave, most US states did not begin to introduce quarantine, similar to Martov, and this decision helped limit the economic consequences of the new outbreak. Experts believe that in January, employment indicator outside agriculture returned to an upward trajectory after the first fall over the past 8 months. Speeches of a number of officials of the Federal Reserve System are also planned. Although Powell Chairman refrained from forecasts regarding the possible folding of the repurchase of assets, his colleagues may not be so restrained.
Meanwhile, the Reserve Bank of Australia did not adjust the interest rate. This decision was made against the background of improving macrostatistics in the country (for example, business activity index in the production sector). The decision of the Central Bank did not become a surprise, and therefore its influence on the Australian dollar was limited. Now the attention of investors will switch to the upcoming releases on retail sales and business activity in the services sector. All three commodity currencies traded in the Red Zone, and headed the decline of the Canadian dollar.
Meanwhile, the euro is the outsider of trading in Monday; A single currency did not even help revision of the indicators of the eurozone's business activity in the direction of increasing. The main obstacle to the currency path was the fall in consumer demand. Retail sales in Germany for December fell on -9.6%, which turned out to be much worse than the forecast in -2.6%. In mid-December, the Chancellor of Angela Merkel closed most of the retail stores (after the failure of the partial November "Lokdaun"). These restrictions acted throughout January, which means that last month the indicator could not recover. On Tuesday, the Eurozone GDP report for the fourth quarter will be published, and although the German economy has grown stronger than experts expected, the general release should be more restrained.
The pound also decreased by ignoring the revision of indicators of business activity towards the increase. Last week, the GBP / USD couple consolidated and now looks ready for correction. The meeting of the Bank of England will take place this week, and although no one expects a monetary policy adjustment regulator, conversations about negative interest rates can put pressure on the currency.
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