This trading week might not be as exciting as the Super Bowl, but there are still some top-tier events worth watching.
The focus will mostly be on U.S. and U.K. inflation figures, U.S. retail sales, and the Australian jobs report.
Before all that, ICYMI, I’ve written a quick recap of the market themes that pushed currency pairs around last week. Check it!
And now for the closely-watched potential market movers this week:
Major Economic Events:
U.K. jobs report (Feb. 14, 7:00 am GMT) – A bit of improvement is eyed for the U.K. labor market, as the January claimant count change could show a lower 17.9K increase compared to the earlier 19.7K gain.
The unemployment rate likely stayed unchanged at 3.7% while the average earnings index might reflect a dip in wage growth from 6.4% to 6.2% for the three-month period ending in December.
BOJ Governor appointment (Feb. 14) – The Japanese government’s appointment of the next BOJ head could set the tone for yen price action for the rest of the week (or much longer!) so it’s worth keeping tabs on their presentation to parliament this week.
Will it be Amamiya or Ueda? The former is seen as a continuity candidate (a.k.a. more easing for the BOJ) while the latter is known to be critical of the BOJ’s ultra-easy monetary policy.
In any case, watch out for additional yen volatility during the actual announcement!
U.S. inflation data – We’ve all seen how the latest NFP report changed the Fed’s trajectory, but will Uncle Sam’s inflation figures support or contradict this hawkish view?
First up, we’ve got the CPI readings (Feb. 14, 1:30 pm GMT) lined up on Valentine’s Day, with analysts expecting a 0.5% rebound in the headline reading after the earlier 0.1% dip.
However, the year-over-year headline CPI might still dip from 6.5% to 6.2%. The core version of the report might show a stronger 0.4% uptick for January versus the previous 0.3% gain.
Later in the week, we’ve got the PPI figures (Feb. 16, 1:30 pm GMT) due, and these might provide insights on underlying price pressures. Headline PPI is slated to recover by 0.4% after the earlier 0.5% decline while the core PPI could advance from 0.1% to 0.3% in January.
U.K. CPI (Feb. 15, 7:00 am GMT) – Next up, it will be the U.K. economy’s turn to print their inflation figures. Will we see another surge in price levels?
Estimates are suggesting otherwise, as number crunchers predict the headline CPI would dip from 10.5% to 10.3% year-over-year while the core figure could drop down a notch from 6.3% to 6.2%.
Underlying inflation might still remain elevated, though, as PPI input prices could pick up by 0.2% after the earlier 1.1% drop while PPI output prices probably rebounded by 0.1%.
U.S. retail sales (Feb. 15, 1:30 pm GMT) – Last but certainly not least is the U.S. retail sales report due on Thursday’s New York session.
After a bit of a slump in December, consumer spending likely picked up again in January. Headline retail sales are projected to have increased by 1.7% while core retail sales probably rose by 0.9%, erasing most of the earlier 1.1% declines.
Keep in mind that stronger than expected results could reinforce the Fed outlook that the economy is doing much better than they initially thought, which could mean room for more rate hikes!
Forex Setup of the Week: GBP/CHF
Got another set of top-tier data from the U.K. this week!
Can these be enough to keep GBP/CHF inside its descending triangle?
Or are we about to see a breakdown soon?
The pair is already hanging out at the triangle support around the 1.1100 major psychological mark, still deciding where to head next.
If support holds, another move up to the top around the 1.1350 level could be in the cards. A break lower, on the other hand, could set off a drop that’s the same size as the chart pattern.
That’s roughly 500 pips yo!
Technical indicators are looking mixed for now, with the moving averages oscillating to reflect consolidation and Stochastic pointing down to hint that sellers have the upper hand.
It could all depend on the outcome of the U.K. jobs report and CPI figures, though, as downbeat readings would suggest that the BOE might need to pause tightening soon.
