Forex Market Outlook for the Week February 08 – 12, 2021

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As in the past weeks, investors are likely to continue to monitor the COVID-19 figures and the progress being made with the new stimulus package in the US. Key economic data releases scheduled for the week include the inflation rate from the US and fourth-quarter GDP figures from the UK. Having said that here is an outlook on a few important releases:

#1: New Zealand Inflation Expectations (02/09/2021 Tuesday 02:00 GMT)

In New Zealand, two-year inflation expectations – considered to the timeframe over which monetary policy action gets reflected on prices – rose to the 1.6 percent level in the final quarter of last year from the 1.4 percent level in the prior three-month period.

#2: United States CPI (02/10/2021 Wednesday 13:30 GMT)

In the United States, consumer prices increased 0.4 percent on a month-over-month basis in December last year, following the 0.2 percent rise in the previous month. The reading for the month was in line with analysts’ expectations. The increase in consumer prices was driven by the 8.4 percent rise in the gasoline index. The contribution of the index to the overall increase in consumer prices was more than 60 percent. The energy index’s other components remained mixed, resulting in a gain of 4 percent for the month. The food index edged up 0.4 percent in December, driven by the 0.4 percent gain in both the food away from home and food at home indexes. Shelter prices increased for the 5th month in a row. Apparel and new vehicle prices also increased.

Forecast for January 2021: 0.4 percent

#3: United States Core CPI (02/10/2021 Wednesday 13:30 GMT)

forex market outlookIn the United States, core consumer prices, which exclude volatile items like food and energy, increased 0.1 percent on a month-on-month basis in December 2020, following the 0.2 percent rise in the prior month. The reading for the month matched with analysts’ expectations.

Forecast for January 2021: 0.3 percent

#4: United States Crude Oil Inventories (02/10/2021 Wednesday 15:30 GMT)

In the United States, crude oil stocks declined 0.994 million barrels during the week that ended on January 29th. Analysts had expected crude oil stocks to increase by 0.446 million barrels. In the previous week, the crude oil inventories had dropped by 9.91 million barrels, the biggest decrease ever since the week that ended on July 24th. Meanwhile, gasoline stocks jumped 4.466 million barrels against analysts’ expectations for an increase of 1.134 million barrels.

#5: United Kingdom BOE Governor Andrew Bailey Speaks (02/10/2021 Wednesday 17:00 GMT)

Andrew Bailey, Governor of the Bank of England, is scheduled to speak at the Mansion House dinner in London. Markets often turn volatile during his speeches as traders make an attempt to understand the direction of interest rates.

#6: United States Federal Reserve Chair Jerome Powell Speaks (02/10/2021 Wednesday 19:00 GMT)

Jerome Powell, Federal Reserve Chair, is scheduled to speak at a webinar hosted by the Economic Club of New York. Markets often turn volatile during his speeches as traders make an attempt to understand the direction of interest rates.

#7: European Union Economic Forecasts (02/11/2021 Thursday 10:00 GMT)

Released on a quarterly basis, this report provides economic forecasts for European Union member states over the succeeding two years, covering as many as 180 variables. The European Commission uses these forecasts to evaluate the economic performance and trends in member states with regard to potential austerity measures as well as other forced spending cuts.

#8: United States Unemployment Claims (02/11/2021 Thursday 13:30 GMT)

The number of people in America filing for jobless benefits dropped to 779,000 during the week that ended on January 30th from the prior week’s revised figure of 812,000. The reading for the week came in well below analysts’ expectations of 830,000. With this, the number of people filing for jobless benefits has declined for three weeks in a row. This is also the lowest number of claims since the last week of November last year. However, the claims continued to remain far above the pre-pandemic levels. Further, the jobless claims are likely to remain higher for some time. This is because the coronavirus pandemic is not yet under control even though the vaccination has already been started. The number of claims for unemployment benefits dropped to 816,000, on a non-seasonally adjusted basis, from the 840,000 level in the prior week. Moreover, approximately 349,000 people applied for help under the Pandemic Unemployment Assistance scheme which supports workers who are not qualified for initial claims. In the previous period, 404,000 had applied for benefits.

Forecast for the week ending February 6th: 775,000

#9: United Kingdom Preliminary GDP (02/12/2021 Friday 07:00 GMT)

Britain’s GDP grew 16 percent in the third quarter of last year, revised upward from the preliminary estimate of 15.5 percent. The economy contracted a record 18.8 percent in the prior quarter. This was by far the strongest rate of economic expansion ever since the series was started in 1955. The expansion was supported by the recovery in private and government consumption and, to some extent by the increase in business investment because of the easing of lockdown restrictions in the quarter. However, the GDP remained 8.6 percent below the pre-pandemic level. On a year-on-year basis, Britain’s economy declined by a revised 8.6 percent.

Forecast for the fourth quarter of 2020: 0.5 percent

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