- What events may drive the market between 08 and 12 February?
- 2021-02-09 14:20:50 (GMT)
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Kate Stikhinа|InstaForex TV Director
Hello! This week is going to be rather interesting and rich with significant macroeconomic events. Be on top of the news highlights with our weekly digest.
What to expect on Forex this week?
Monday | 08 February
Even though the macroeconomic calendar on Monday will be empty as usual, there will be still something worth paying attention to. This refers to Switzerland, where the unemployment rate should rise to 3.6% from 3.5%. Most likely, this will lead to a modest fall in the price of the Swiss franc.
Tuesday | 09 February
Tuesday will be a calm and uneventful day. The macroeconomic calendar will be completely empty. This is probably for the best, since market participants will be able to prepare for the release of the US inflation report.
Wednesday | 10 February
On Wednesday, the US will deliver its inflation data. The inflation rate should accelerate to 1.4% from 1.2%. Given the general trend towards the strengthening of the greenback, the final reading will only boost the currency. Apart from that, there will be nothing else to expect on Wednesday.
Thursday | 11 February
Thursday will be as busy as Wednesday. The day will start with the publication of the retail sales data in the eurozone. The reading is expected to increase to -1.0 from -2.9%. Therefore, the euro will probably extend its rally. The crucial event of the day will be the Board meeting of the Bank of England. However, it is unlikely to somehow influence investor sentiment. The regulator is expected to keep its monetary policy unchanged like other largest central banks. Thus, the pound sterling will not react to the outcome of the event. This means that investors will be focusing more on the US jobless claims ahead of the Labor Department report. This is going to be a pessimistic forecast again, since both initial and continuing jobless claims should show a small increase in their number. However, one should not forget that similar forecasts have been made for a long time. Nevertheless, the number of jobless claims has been decreasing steadily. This time, the same scenario may unfold again. Of course, it will lead to the strengthening of the greenback.
Friday | 12 February
Friday will be the most interesting and busy day of the entire week. It will kick off with the preliminary GDP report in the United Kingdom. The economy is expected to shrink to -8.0% following a contraction of -8.6%. Even though the slump is still too deep, the most important thing is that the economy shows early signs of recovery. This, of course, will provide support for the pound. Meanwhile, industrial production in the United Kingdom is projected to decrease to -5.4% compared to a -4.7% fall, restraining the pound from rising. Similar situation is likely to unfold in the euro area, where industrial production is forecast to plunge to -3.2% from -0.6%. Clearly, this fact will lead to the weakening of the euro. At the same time, the Swiss franc may come under pressure due to deflation in Switzerland. In fact, there has been a decline in consumer prices in the country for eleven consecutive months. Moreover, the inflation rate is expected to accelerate to -0.9% from -0.8. Such a prolonged and deep deflation will inevitably affect the franc. Notably, foreign investments to the Swiss economy dropped almost to a zero level during deflation.
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As for the technical analysis, traders should pay attention to the following price levels:
1,2000***; 1,2150*; 1,2185*; 1,2350**; 1,2550; 1,2825.
1,1900**; 1,1810*; 1,1650*; 1,1500.
1,3750**; 1,4000***; 1,4350.
1,3650*; 1,3560*; 1,3450*; 1,3300*; 1,3000***; 1,2860.
0,9000***; 0,9200-0,9250***; 0,9480; 0,9650**.
0,8750**; 0,8550; 0,8000***.
* Periodic level** Level of a trading range*** Psychological level
Germany’s businesses enter new year on pessimistic note
Germany’s economy seemed to regain momentum at the end of 2020. However, despite some improvement, the German business sentiment fell sharply in January 2021. According to the Ifo research institute, the business climate indicator for Germany tumbled in January to the lowest level in 6 months for the obvious reason. The second COVID-19 wave is putting a strain on the domestic economy.
The Ifo business climate index dropped to 90.1 in the first month of 2021, much lower than the revised 92.2 in December 2020. A second lockdown prompted disruption to businesses in the largest eurozone’s economy.
Germany’s economy has to survive the corona crisis in Q1 2021 with the service sector bearing the brunt of it, chief economist at VP Bank Thomas Gitzel comments on worsening business conditions. The authorities’ decision to extend restrictions is denting recovery prospects of local businesses. Importantly, some lockdown measures will remain in force until mid-February. Indeed, it is still premature to ease tough restrictions in the near time. Several Germany’s provinces which have been hit the hardest by the pandemic called on the federal government to extend the lockdown.
Germany’s gross domestic product shrank 5% in 2020. The national output is expected to rebound 3% in 2021 on condition that tough restrictions are lifted. In the final quarter of 2020, the powerhouse of the eurozone’s economy was able to regain footing with zero economic growth. A slump in the hospitality industry and retail sales was offset by a revival in the manufacturing sector and construction.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade
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Be on top of the forex market events with FX.co,Kate Stikhina, InstaForex TV Director
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