During the upcoming trading week central bank decisions from the Reserve Bank of Australia and Bank of England are set to take centre stage, alongside the Non-farm payrolls job report, ISM Manufacturing report and US earnings seasons.
Other highlights on the economic calendar include US ISM services, German retail sales, eurozone consumer price inflation, EU retail sales, Australian unemployment and employment data, and Australian retail sales numbers.
Reserve Bank of Australia
The Australian central bank is widely expected to keep interest rates unchanged at current levels. Perhaps the most contentious issue is QE. The central bank may extend the ongoing QE program until April according to some economists.
However, the Reserve Bank of Australia are expected to give a slightly more upbeat assessment of the Australian economy and talk up the recent improvements in the Australian labour market, following last month jobs report.
Traders should remember that the central bank will be speaking on numerous occasions throughout the week and will also be issuing the all-important quarterly statement on February 5th.
Bank of England
The Bank of England is widely tipped to keep interest rates unchanged this week and talk up the prospects of the UK economy as the ongoing vaccine rollout helps to lift hopes that the recent series of lockdowns may soon come to an end.
Perhaps the most contentious issue will be negative interest rates. Bank of England Governor Bailed has recently talked down the prospect of negative interest rates. Expect the central bank to stay on script and talk back previous comments.
Sterling strength is unlikely to get a mention, as the Bank of England stop short of joining the chorus from other central banks calling for a weaker currency. Sterling should breakout higher if the BoE sound more hawkish.
US Job Report
The January jobs report from the US economy is expected to show a marked improvement from the -140,000-report last month. Most economists are predicting the US economy created +85,000 jobs in January.
The US unemployment rate is expected to have remained the same alongside US Average Hourly Earnings. Market participants are looking for signs of US inflation, so this report may not be a great market mover if consensus forecasts are correct.
Should we see a positive headline number of +85,000 then stock markets and the US dollar may see a slight pop. This is the first jobs release under the Biden administration, although the decisions from the new US President and Treasury Secretary Yellen are unlikely to impact the economy until the second fiscal quarter.
US Earnings Season
Amazon is expected to release bumper earnings after the series of ongoing global lockdown benefited the online shopping giant. Record earnings numbers could see Amazon’s stock breaking to the upside.
PayPal is another stock to watch. The company recently introduced cryptos to its payment offering. Wall Street will be closing looking to see how the introduction of cryptocurrencies helped PayPal’s bottom-line.