![\"US](\"https:\/\/shared.gighl.com\/Week_ahead%202021\/05-02-2021\/us-inflamation-measures-05-02-2021.PNG\")
<\/p>\nA high number of high impact financial releases and central bank interest rate decisions tended to rock the markets in the past week. In the coming week, we may see the impact of financial releases easing somewhat and fundamentals taking the lead. Subjects such as the stimulus package for the US economy as well as the path of the pandemic and rate of vaccination could capture trader\u2019s attention. As for financial releases we would highlight China\u2019s and the US inflation measures for January on Wednesday as well as UK\u2019s GDP rates for Q4 on Friday. Overall though, should the positive market sentiment continue to be present in the markets, we may see US stockmarkets reaching new highs. Its characteristic how oil prices were on the rise over the past few days due to expectations for a possible revival of economic activity worldwide<\/p>\n
Given that the uncertainty caused by the Robinhood retail traders in the past week has eased considerably, the market\u2019s attention now turns to the efforts of the US Government to pass its fiscal stimulus bill through Congress. The casting vote of Vice President Kamala Harris was required as the Senate was split 50-50 on the vote, something setting the tone for what is to come. The US President is expected to meet with lawmakers of the House of Representatives today and could sway the markets keeping the effect also for the coming week. Fundamentally there seems to be a strong optimism guiding the markets boosting both the USD as well as the US stockmarkets. It\u2019s interesting how the USD has transformed to a risk on currency as optimism for the US economy\u2019s rebound is ongoing and the issue about how large the fiscal stimulus is and how fast it may come into effect, could continue to affect the markets in the coming week. In the US political stage, we could not miss out to note that the trial for the 2nd impeachment of President Trump is to begin next week, making lots of headlines. Should there be no surprises despite the issue being substantially interesting, we expect the market\u2019s reaction not to be so intense given that the event shouldn\u2019t affect the US economy\u2019s course. On the monetary front we highlight Fed Chair Powell\u2019s speech on Wednesday, yet a number of other speakers from the Fed are also scheduled to speak throughout the week. Also on a fundamental level, the news that Johnson and Johnson has applied to the FDA for emergency use authorization of its investigational single-shot COVID-19 vaccine candidate is good news. Should the vaccine be approved, it would help pick up the pace of the vaccination process in the US, as it is an additional medication and is of a single shot. As for financial releases, we would note the CPI rates for January on Wednesday, the weekly initial jobless claims figure on Thursday and on Friday the preliminary University of Michigan consumer sentiment for February.<\/p>\n
<\/p>\n
pound resisted the strengthening of the USD yet at the same time tended to get support also against the EUR, JPY and CHF in the past days. BoE\u2019s interest rate decision seems to have lent a helping hand to GBP traders. The bank maintained its interest rates and QE program unchanged as was expected. The optimism of the bank was evident as despite stating that the current policy being appropriate and negative interest rates being available in the bank\u2019s toolbox, the GDP is to recover quickly reaching pre-pandemic levels in the current year. It\u2019s characteristic that BoE\u2019s Governor Andrew Bailey stated that the \u201cUK\u2019s performance is nowhere near as adverse … as suggested by the headline numbers\u201d. Also, on the monetary front, BoE Governor Bailey is to appear in the UK Parliament on Monday, which could create some volatility for the pound. In the coming week though the bank\u2019s expectations are to be put to the test as the preliminary GDP rates for December and Q4 are to be released on Friday. On the same day also UK\u2019s manufacturing output for December and trade balance figure for December could be of interest for GBP traders. At the same time, the ongoing vaccination process and the low number of new cases tends to increase hopes for a quicker return to some sort of normality. We expect the vaccination process in the UK to continue to affect the pound in the coming week as well as the overall path of the pandemic.<\/p>\n
![\"UK](\"https:\/\/shared.gighl.com\/Week_ahead%202021\/05-02-2021\/uk-gdp-05-02-2021.PNG\")
<\/p>\n
Despite today\u2019s strengthening of the EUR against the USD we still have our doubts as the downward motion since the 29th of January, seems to be still ongoing. The slow vaccination process in Europe seems to weigh considerably on the common currency as it clouds the timing of its economic recovery. It\u2019s characteristic that Germany is in turmoil about the issue as the strict lockdown measures are still ongoing for the coming wek as well. Please note how Germany\u2019s retail sales growth rate plunged to the lowest point on record for December as a result of the lockdown measures. Hopefully the low number of new cases achieved in the past few days seem to provide the possibility for the lockdown measures to ease. Yet without vaccination being widely available, the Eurozone will have to wait in order to make solid claims for a possible economic recovery, which may take some time. On the positive side, a political crisis in Italy seems to have been prevented as Mario Draghi (former ECB President) accepted the mandate to form a new government. Whether he will be successful and with what consessions remains to be seen. On the monetary front we have our sights on Lagarde\u2019s speech on Wednesday. While as for financial releases, we note on Monday Germany\u2019s industrial output growth rate for December along with Eurozone\u2019s Sentix index for February and on Tuesday Germany\u2019s trade balance for December. On Wednesday we get Germany\u2019s final HICP rate for January, which could confirm a revival of inflationery pressures in the largest economy of the area.<\/p>\n
![\"Germany](\"https:\/\/shared.gighl.com\/Week_ahead%202021\/05-02-2021\/germany-industrial-05-02-2021.PNG\")
<\/p>\n
The Aussie is about to end the week lower against the USD for a second week in the row. RBA\u2019s interest rate decision, which kept rates unchanged yet expanded its QE program, along with some disappointment for the slowdown of economic activity expansion of China\u2019s manufacturing sector, seems to have taken off some of AUD\u2019s shine. In the coming week, we could see the Aussie be affected by the overall market sentiment getting support should optimism continue to characterise the markets and vice versa. Also on a fundamental level we tend to keep under a watchfull eye further developments in the US-Sino as well as the Australian-Sino relationships. Should tensions rise we may see the Aussie weakening. As for financial releases, we note the release of Australia\u2019s Business conditions and confidence for January on Tuesday. On Wednesday we note Australia\u2019s consumer sentiment for February as well as China\u2019s inflation measures for January.<\/p>\n
![\"China\u2019s](\"https:\/\/shared.gighl.com\/Week_ahead%202021\/05-02-2021\/chinas-inflamations-rates.PNG\")
<\/p>\n
JPY\u2019s weakening against the USD seems to be ongoing in the past few days, given that the Japanese currency may have succumbed to USD\u2019s strength. The positive market mood may have also caused some safe haven outflows for JPY, given that it weakened also against the GBP, while remained rather steady against the weak EUR. Overall we expect the market sentiment to continue to guide the Japanese currency and should optimism continue to characterise the markets, we may see JPY weakening further against the USD. Overall the retreat of JPY, may have brighten the days of some BoJ members as well as the Japanese government, as substantial worries were expressed at the end of January about its strengtheing. On the other hand, it should be noted that Japanese stockmarkets were on the rise in the past days, once again displaying the positive mood. Despite financial data usually failing to impress JPY traders, we would like to note on Monday Japan\u2019s current account balance for December, while on Wednesday we get the corporate goods price growth rate for January.<\/p>\n
![\"Japan](\"https:\/\/shared.gighl.com\/Week_ahead%202021\/05-02-2021\/japan-corporate-goods-prices-05-02-2021.PNG\")
<\/p>\n