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Political events were plentiful over the weekend, proposals were made on both sides of the aisle regarding the partial closure of the government, the second Trump / Kim summit is expected in February and officials of the EU do not know how long Brexit should be extended, if and when PM may request. The start of the week will focus on Chinese GDP, May's Plan B and the likely rejection of the EU, then move on to central bank rate decisions. No major surprises are expected from the BOJ and the ECB, the main data of the European PMI will be close watched and there will be many comments from various leaders of the World Economic Forum in Davos.
USD
The factors behind the recent upturn in the US dollar are a good start to the US earnings season, robust employment data, and accommodative monetary policies to cushion global economic weakness. Political and commercial stories will play an important role this week in the demand for safe haven badets. The partial shutdown of the government is now in its 30th Over the weekend, President Trump proposed a compromise on immigration to end the closure, but Democrats quickly rejected it. Democrats have opposed a permanent solution to the so-called "dreamers", the offer of the President providing a solution over three years. The demands from both sides are still far away, but optimism could grow as we finally see offers to make. Nearly a year ago, when Trump was leading Republicans in the House and Senate, he ended negotiations that would have netted $ 25 billion over 10 years of border funding after Democrats had sought a permanent solution for DACA. The 800,000 laid-off workers are suffering more and more and although there is no reason to be optimistic, the president may have to start by blinking his eyes so that his administration can move forward on other objectives, such as an agreement on infrastructure, trade agreements and the denuclearization of the North. Korea.
AUD
The Australian dollar will pull a tail of data from its main trading partner, publishing China's GDP, retail sales and industrial output. The concerns related to the slowdown have kept Aussie on the ground and the next set of data should continue to show the weakness of the Chinese economy. Chinese GDP reading in December is expected to decline from 6.5% to 6.4% and industrial production from 5.4% to 5.3%. The effects of the reductions in the Chinese RRR will not be felt until the January readings. Some badysts predict that China's GDP will fall below 6% by 2020, but in the short term, if the impression comes close to 6.0%, it could be very painful for the Australian dollar.
KRW
The first Trump / Kim Summit was held in Singapore in June and leaders could plan a summit in February in Vietnam. On Friday, President Trump met with North Korea's chief adviser, Kim Yong Chol. The interviews seem positive and focused on denuclearization and a second meeting. Penalties have been in place for North Korea since 2006, with 90% of their exports banned. The North Korean economy has slowed since 2016 and the North Korean leader could be in a position where he could finally consider opening the way to denuclearization.
GBP
Every day that pbades for Theresa May, the pressure increases to find a solution that will avoid a disorderly exit. The Prime Minister is anxious to create a Plan B option for Monday night. Immediately after she survived the vote of no confidence in Parliament, she suggested holding party discussions with Labor. Union Chief Corbyn demanded that she remove the option of prohibiting bargaining, but the Prime Minister has always refuted it. May seems to have dropped talks between parties and sought to find changes on Irish support, a difficult task to accomplish with pro-Brexit members. It should not exclude that the European Union will oppose great resistance. May continues to avoid talks on the extension of Article 50, but that is perhaps his best option. The pound sterling seems capped at 1.30 and will need positive developments to reach this level.
JPY
The Bank of Japan (BOJ) will have a rate decision on Tuesday and markets will follow closely to see if they reduce their inflation and growth forecasts.
EUR
The ECB will also have a rate decision on Thursday and no changes are expected with its key rate. Many will want to know if they are delaying the timing of their first rate increase. The interest rate probabilities show that the ECB could raise rates at the December meeting. The ECB has made it clear that rates will rise after the summer, but we may see a slight delay.
Oil
Oil prices skyrocketed after growing optimism over trade negotiations between the United States and China. Positive developments within OPEC +, which have maintained their production cuts and encouraged trade negotiations, have given oil the best start since 2001, up more than 17.8%. The problem for oil will be when the market will focus again on the supply. Despite the belief that the global economy will improve and once we get past Brexit and trade wars, the United States will eventually produce more oil exports than it will import. The American shale industry is confident of staying, and while oil is on an uptrend here, supply-side concerns could potentially limit this rally.
Gold
Gold prices continue to meet the $ 1,300 level and could further weaken if we continue to headline trade negotiations and the earnings season continues to drive risk appetite.
Monday 21st January
CNY China GDP
GBP PM May Plan B due
2:00 EUR German PPI
American holidays; Observance for the MLK day
Tuesday January 22nd
JPY BOJ Interest Rate
4:30 am GBP UK Average rate of pay and number of asylum applications
05:00 EUR German ZEW survey on the current situation
10:00 USD Sales of existing homes
16:45 NZD Reading the IPC
Wednesday, January 23
World Economic Forum (4-day event)
8:30 CAD Retail Sales
10.00 EUR Consumer confidence in the euro area
10:00 USD Manufacturing index Richmond
Thursday, January 24
Main PMI statements of European manufacturers and services in EUR
ECB rate decision of the ECB at 7:45
PMI Manufacturing and Services PMI Readings at 9:45 USD
11 am Crude oil stocks
Friday, January 25
04:00 EURO German Ifo Business Climate
This article is for general information only. This is not an investment advice or a solution for buying or selling securities. Opinions are the authors; not necessarily that of OANDA Corporation or its affiliates, subsidiaries, officers or directors. Leverage trading is high risk and not suitable for all. You could lose all your deposited funds.
With more than 20 years of trading experience, Ed Moya is a market badyst at OANDA. It produces an up-to-date fundamental badysis of geopolitical events and monetary policies in the United States, Europe, the Middle East and North Africa. During his career, he has worked with some of the world's leading currency brokers and research departments, including Global Forex Trading, FX Solutions and Trading Advantage. Most recently, he worked at TradeTheNews.com, where he provided market badysis on economic data and business information. Based in New York, Ed is a regular guest of several major financial television networks, including BNN, CNBC, Fox Business and Bloomberg. He is often quoted in leading print and online publications such as the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University. Follow Ed on Twitter @edjmoya
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