There is another significant week ahead for financial markets, with a series of major central banks making rate decisions, key data releases, and potential liquidity issues as Lunar New Year celebrations begin.
Central bank rate decisions dominate the event calendar this week, and traders expect market movements around these announcements, as many remain “live”. Newswires will also be closely monitored, with markets anticipating increased volatility from any updates related to the US and the new administration.
Here is our usual day-by-day breakdown of the major risk events this week:
Liquidity could be an issue throughout the week in the Asian session due to holidays across the region. Australian markets are closed on Monday, and the initial focus for traders will be on China, with key PMI data scheduled for release before Chinese markets close for the remainder of the week for Lunar New Year. European markets will open with a focus on the ECB, as President Christine Lagarde speaks ahead of the release of German IFO Business Climate data. In the US session, New Home Sales data will be published.
The trading day is expected to start quietly, with little on the calendar during the Asian and European sessions. However, activity should pick up once New York opens, as Durable Goods and CB Consumer Confidence data are due for release in the US.
Asian markets will be active on Wednesday morning, with the Bank of Japan’s Monetary Policy Meeting Minutes and key Australian CPI data being released mid-morning. Central banks will dominate the rest of the day. The focus will be on the UK during the European session, with BOE Governor Andrew Bailey set to testify on the Financial Stability Report before the Treasury Select Committee. As the New York session opens, attention will shift to the Bank of Canada’s latest rate decision. Later in the day, the FOMC will deliver its latest rate update, closing out the session.
Thursday is expected to bring quieter markets, though traders anticipate continued fallout from the FOMC update affecting the Asian session. There are no significant events scheduled for Asia, but the key European Central Bank rate decision will take place midway through the London session. In the US session, crucial data will be released, including the latest Advance GDP figures and Weekly Unemployment Claims.
Friday will likely be another subdued session in Asia, but tier-one data from Europe and North America will provide direction in the latter part of the day. The European session will focus on Germany, with the release of Preliminary CPI data. Once the New York session begins, Canadian GDP data will be released alongside the US Core PCE Price Index and Employment Cost Index figures.
