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During the upcoming trading week, the United States Federal Reserve policy meeting is set to take centre stage. FED members will not be offering their so-called “dot plots”, however, the January policy decision from the US central is the first under the new Biden administration.
The Federal Reserve will have to tread carefully this week to avoid building up markets expectations about the current outlook for the US economy. The FED need to be that they do not set-up a “taper tantrum” in financial markets as the attempt to outline their current assessments on the world’s largest economy.
Traders and investors have been looking for signs that the United States economy is turning, and that the “reflation trade” is back on the table. The FED almost certainly need to manage the markets expectations to avoid bond yields rising and the greenback selling-off.
Last week’s decade high US PMI Manufacturing reading further underscores that weakness in the US dollar is aiding manufacturing activity and in-turn is helping the employment situation in the United States. The FED will be acutely aware the recovery underway in the manufacturing sector is masking weakness in other areas of the US economy, so keeping the US dollar weak is certainly in their interest.
The United States economic calendar is also packaged with important released such as Q4 Gross Domestic Product, Core PCE, Durable Goods Orders, Personal Spending, Jobs, and the continuation of earnings season.
Tesla, Boeing, and American Airways are all set to release fourth-quarter earnings data, meaning that stock traders will be on high alert for volatility this week. Tesla’s fourth-quarter numbers are probably going to come under the most scrutiny as the stock continues to defy gravity with a 600 percent increase in under one-year.
The electric automobile stock has gone from strength-to-strength since being listed on the S&P500 and attracted the attention of fund and pension managers. Many traders like Tesla for the volatility, and it is seen as being the Bitcoin of the stock market.
Apple is also set to release Q1 results this week. Typically, the first fiscal quarter has been kind to Apple due to holiday season in China and also New Year sales in various western nations. Profits are expected to come in at $1.40 per share, with analysts looking for updates on the performance Apple TV+, Apple Watch, various fitness apps, and the new iPhone.
The job situation inside the United Kingdom economy is set to be a big focus for investors this week. as COVID-19 continues to ravage the UK economy. The latest’s lockdown places risks to the downside for this week employment numbers.
Last week’s Services PMI showed a marked deterioration from the previous month as the sector took a massive hit from the third UK lockdown. The UK Unemployment rate will also be closely watched, sterling and the FTSE100 could take a hit if this week if unemployment data come in higher-than-expected.
The German economy release IFO, CPI inflation, and GDP data this week. Expectations are to the downside for the IFO survey and GDP, however, the German CPI inflation is set to come in around +0.7%.
Other highlights on the economic calendar include French GDP, Australian CPI, and the release of the Bank of Japan Meeting Minutes. Italian politics will also be in the spotlight this week as rumours persist that a new Italian election could be forthcoming.
