It looks like a potentially pivotal week ahead for investors, as the new administration takes control of the US government. Traders are expecting significant volatility in the New York session on Monday, despite US markets being closed for a holiday.
The week is expected to be dominated by the numerous updates likely to emerge from the new political setup in the US. However, there is also a substantial focus on tier-one data updates from other jurisdictions throughout the week, including the key Bank of Japan rate decision.
Here is our usual day-by-day breakdown of the major risk events this week:
The initial focus during the Asian session will be on China, with key Loan Prime Rate updates expected midway through the session. However, with little else on the event calendar for the rest of the day, updates from the United States, particularly from the new president, are likely to dominate as we move into the latter part of the day.
There is nothing notable on the event calendar during the Asian session, but traders will continue to monitor updates from the United States, with plenty of volatility anticipated. In the European session, initial focus will shift to the UK, where employment data is due early in the day, before the markets transition into the New York session. The early focus in North America will be on Canada, with CPI numbers being released, although sentiment is expected to be shaped by US market reactions to updates from the new government.
New Zealand markets will be in focus for Asian traders, with CPI data released early in the day. Beyond this, the only major scheduled event is a speech by ECB President Christine Lagarde later in the day, leaving little else to drive market movements.
The first two trading sessions of the day are expected to remain quiet. However, attention will shift to Canadian markets once the New York session opens, with Retail Sales numbers scheduled for release. In addition, the usual weekly Unemployment Claims figures and Crude Oil Inventory data will be published in the United States during the session.
The most significant scheduled event of the week comes on Friday, with the Bank of Japan expected to announce its latest rate decision, typically around lunchtime in Tokyo during the Asian session. The remainder of the day will be dominated by Flash Services and Manufacturing PMI releases from various markets, including France, Germany, the Eurozone, the UK, and the US. Additionally, Existing Home Sales data and Revised University of Michigan consumer sentiment figures are due during the New York session.
