Forecasting the upcoming week: All the attention shifts to US Inauguration Day

The Greenback halted a multi-week positive streak, prompting the US Dollar Index (DXY) to come under pressure shortly after hitting fresh cycle peaks north of the 110.00 barrier on January 13. In the meantime, the Dollar’s price action swung between potential announcements from the Trump administration, mostly disappointing fundamental data, and speculation surrounding the Fed’s plans for its January meeting.

The US Dollar Index (DXY) traded on the defensive every day but on Friday, when it managed to stage a decent advance and put some distance from weekly lows around 108.60. Donald Trump’s Inauguration Day on Monday is expected to be the salient event next week. Moving forward, the weekly Mortgage Applications by MBA and the API’s report on US crude oil inventories come on January 22. The usual weekly Initial Jobless Claims come on January 23 along with the EIA’s report on US crude oil supplies. Closing the week aligns the preliminary S&P Global Manufacturing and Services PMIs, Existing Home Sales and the final print of the Michigan Consumer Sentiment.

EUR/USD traded with an acceptable bid bias throughout the week, enough to reverse six consecutive weekly retracements and rebound from cycle lows near 1.0180. Germany’s Producer Prices and the Construction Output in the euro area are due on January 20. The ZEW Economic Sentiment in Germany and the euro bloc is due on January 21, while the European Commission will publish its advanced gauge of Consumer Confidence on January 23. The flash HCOB Manufacturing and Services PMIs are expected on January 24.

GBP/USD remained under pressure for the third consecutive week as investors continued to gauge risks surrounding the United Kingdom (UK) fiscal stance. The UK labour market report comes on January 21, followed by Public Sector Net Borrowing, due on January 22. The CBI Business Optimism Index and the CBI Industrial Trends Orders are expected on January 23. On January 24, GfK’s Consumer Confidence gauge is due, as are the advanced S&P Global Manufacturing and Services PMIs.

USD/JPY navigated a choppy week, managing to recoup part of the ground lost towards the end of the week amid persistent market chatter surrounding the upcoming Bank of Japan (BoJ) gathering and the likelihood of a rate hike. Machinery Orders, Industrial Production and the Tertiary Industry Index are all due on January 20. The Balance of Trade and weekly Foreign Bond Investment will come on January 23. The Inflation Rate and the flash Jibun Bank Manufacturing and Services PMIs will precede the BoJ’s monetary policy event on January 24.

Despite AUD/USD managing to bounce off multi-year lows near 0.6130 this week, the pair is expected to remain under heavy pressure in the next few weeks. The Westpac Leading Index comes on January 22, while the preliminary Judo Bank Manufacturing and Services PMIs are expected on January 23.

Anticipating Economic Perspectives: Voices on the Horizon

-           The ECB’s Lagarde speaks on January 22 and 24.

Central Banks: Upcoming Meetings to Shape Monetary Policies

-           The PboC will decide on rates on January 20.

-           The BNM and the CBRT will meet on January 22 and 23, respectively.

-           The BoJ meets on January 24.