Financial markets are preparing for a busy week with major economic releases that will significantly shape global market trends, starting from the US dollar and British pound to the Swiss franc, in addition to their effects on commodities like gold and oil, as well as their implications for the cryptocurrency market and US stocks.
Key Economic Data and Expected Impacts: Jerome Powell's Testimony Before Congress – Tuesday and Wednesday Federal Reserve Chairman Jerome Powell will give his semi-annual testimony on monetary policy before Congress. These statements are particularly important as they may provide critical signals regarding future interest rates and the Fed's monetary policy, making them a focus for investors. Any hints about the continuation of monetary tightening could support the dollar, while any signals towards a more accommodative policy could pressure the US currency.
US Inflation Data – Wednesday (13:30 GMT) The US inflation report is one of the strongest indicators that the Fed relies on for its decisions. Predictions suggest inflation will stabilize at 2.9% for January; however, any higher reading could enhance the likelihood of monetary tightening, which would raise the dollar and push markets towards caution. Conversely, data below expectations could weaken the dollar and stimulate alternative assets like gold.
UK Economic Growth Data – Wednesday (07:00 GMT) Markets expect the UK economy to grow by 0.1% month-on-month by the end of December. If the numbers exceed expectations, it could strengthen the British pound and increase the likelihood of the Bank of England maintaining its tight monetary policy. If the data falls short of expectations, the pound may face selling pressure.
Swiss Inflation Data – Wednesday (07:30 GMT) Swiss inflation is expected to contract by 0.5%. Any reading lower than expected could push the Swiss franc down, increasing the chances of the Swiss National Bank making decisions to lower interest rates. Conversely, higher-than-expected inflation data could give the franc more strength against other currencies.
US Producer Prices Data – Wednesday (13:30 GMT) Expectations point to a 0.2% rise in the producer price index and 0.3% for the core index. Any results above expectations could push the dollar up, while weak data might boost expectations that the Fed is gradually shifting towards easing its monetary policy.
US Retail Sales Data – Friday (13:30 GMT) This data represents an important indicator of the health of the US economy. If retail sales record growth exceeding expectations, it could support the dollar by boosting market confidence in the continuation of tight monetary policy. On the other hand, data falling short of expectations might negatively impact the dollar and increase pressure on US stocks.
Therefore, the anticipation of this data reflects its significant importance in determining the course of the markets in the forthcoming period. Any surprises in the figures could lead to sharp fluctuations, making this week crucial for investors across various financial assets.
