The Main Events of the Coming Week

February 10, 2014

The US dollar dropped vs. Most major currencies after the weak Employment report release in the USA, which doesn’t meet expectations for the second month in a row. The pound sterling decreased after the weak UK industrial production report, but then negated almost all the weekly losses. The Canadian dollar strengthened its positions after the strong Employment report. 

According to the US Department of Labor, Non-Farm Payrolls increased in January only by 113 000 after the growth by 75 000 in the previous month, which appeared to be more than 1.5 time lower than the forecast. The revision of the data for the previous two months composed +34 000. 

The US weak Employment Rate is being released for the second month in a row which could be partly entailed by the weather. Unemployment Rate continues to reduce for the third month in a row – in January it decreased to 6.6% from 6.7% in December, whereas the changes were not expected. Unemployment Rate still stays at low levels since October 2008. 

The pound sterling reacted to the weak industrial production report by decrease, but then it increased and gained back almost all the weekly losses. The euro also decreased in the middle of the day after the German Constitutional Court referred a complaint against the European Central Bank’s flagship bond-buying plan to the European Court, removing the prospect of it curbing the program. The Outright Monetary Transactions (OMT) is beyond the ECB’s credential of monetary policy and violates the ban of the monetary financing of the budget. 

The Canadian dollar strengthened its positions on Friday after the strong Employment Change report in Canada. Employment Change increased in January at the highest rate over the last 5 months, by 29 400 having exceeded the expectations of growth by 20 000.Unemployment Rate reduced from 7.2% to 7% which appeared to be better than expected 7.1%. The Reserve Bank of Australia in its quarterly monetary policy report released on Friday exceeded the economic and inflation growth forecasts, this fact gave support to the Australian dollar. 

According to the results of the week the US dollar decreased vs. most major currencies having lost 0.8% according to the dollar index. The highest growth was demonstrated by the New Zealand and Australian dollar. The euro, the Swiss franc, and the Canadian dollar increased a bit less vs. the US dollar. The dollar slightly strengthened its positions only vs. the British pound and the yen. 

As usual, during the second week of the month there is not so much data. The most important events in the USA may become the performance of Fed Chair Yellen with the Semiannual Monetary Policy Report in the US Congress. On Thursday Retail Sales is going to be released; on Friday – Import Prices, industrial production, and Preliminary U. of Michigan Consumer Sentiment.

The main event in the Eurozone will be the Friday release of Preliminary GDP of France, Germany, Italy, and the whole Eurozone for the 4th quarter. Industrial production report is going to be released in France, Italy on Monday, and on Wednesday - in the whole Eurozone. On Thursday ECB Monthly Report will be released; and on Friday – the Eurozone Trade Balance. 

The main event in the UK will be the BOE Quarterly Inflation Report with new Unemployment Rate forecast, GDP and Inflation, after that the performance of the BOE Head will take place. It is also expected that the new monetary policy guidance will be released on Wednesday. 

Important Labor Market report in Australian is going to be released on Thursday. On Wednesday in Canada Annual Budget Release will appear. On Monday in China New Loans will be released, on Wednesday – Trade Balance, and on Friday – Inflation data.

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