EUR/USD
By the end of last Friday, the US President Donald Trump declared a state of emergency in the country. This was the last and only way to get the money to build the wall promised to voters on the state border with Mexico. And on this weekend, the Department of Commerce gave the White House a report on the motor vehicle trade. According to this report, Trump may impose additional duties of 25%. This fact has already caused a negative reaction to the industry, although tariffs have not yet been imposed. Trump has 90 days to decide on tariffs for cars. Will they be imposed? At the moment it is difficult to say, but the fact, that the US President will manipulate them. For example, in trade negotiations with Europe or China, after all, on this week the US-China trade negotiations will continue, but in Washington.
While the Chinese delegation will discuss with the American side, which will be focused attention, the week will provide us with some quite interesting and volatile news. Since Tuesday, it is necessary to look at Europe, which will release data on economic sentiment from ZEW in Germany and the EU as a whole. After that, the ECB chief economist Peter Pratt will speak. On Wednesday, traders will wait for the publication of FOMC protocols on the monetary policy of the US regulator.
Thursday will be extremely volatile and saturated. Inflation releases are expected in France and Germany, as well as indices of business activity in the manufacturing sector and the service sector throughout the Eurozone. In the middle of the day, the European Central Bank will publish the minutes of the meeting on monetary policy. The US report on the durable goods orders and indices of production and business activity in the service sector. In the late afternoon will connect the real estate sector, which will tell about sales in the secondary housing market.
At the end of the week, the market participants will closely monitor Germany’s GDP, assessment of the current situation in the EU’s first economy, as well as inflation in the European Union. Taking into account the long slowdown of the European economy, the inflation data will be extremely important. In the Friday evening the head of the ECB Mario Draghi, which will certainly give a comment on one of the most important indicators.
We have quite an interesting and intense week ahead of us.
GBP/USD
While the UK government cannot find consensus, British companies are planning to raise wages by 2.5% in the current year. This will be the biggest increase in wages in the last seven years. The British labor market has proved resilient in the run-up to Brexit, given the unemployment rate at its lowest level since 1970.
However, a member of the Bank of England Gertjan Vlieghe considers that expanding companies, through recruitment rather than buying new equipment, due to the fact, that, if Britain leaves the EU without a deal, firing staff is easier than selling unnecessary equipment. Therefore, these wage increases are observed only in the private sector, in the state wage growth will remain the same, two percent for the year.
We did not just focus on wages, because on Tuesday the UK labor market will report. At 12:30 GMT there will be a release of the average wage, taking into account bonuses, changes in the number of applications for unemployment benefits, changes in employment and unemployment. In general, the positive data are expected everywhere, which can support the pound sterling. On Wednesday, there will be data on industrial orders of Britain, and on Thursday will make a speech member of the monetary policy Committee of the Bank of England Andy Haldane.
AUD/USD
It is also worth paying attention to the Australian dollar this week. Given the positive background from the US-China trade negotiations, Australia’s labor market statistics will affect the Ozzy more than usual. Considering the stable growth of employment over the past three months, and a moderate positive of market participants, the publication of the protocol on the monetary policy of the Reserve Bank of Australia will also be important. After all, at the moment the Bank of Australia can both raise the interest rate and lower it. The protocol will be released from Monday on Tuesday night.
The index of changes in wages will be released on Wednesday, and on Thursday, the labor market will report in full. The level of change in employment and unemployment in January. On Friday, the head of the Bank of Australia Philip Lowe, which will certainly give a comment to the releases of the past days and the published protocol on monetary policy.
