Forex News – Markets to hear from Yellen, Carney in the week ahead
February 7, 2014 2:58 pm
Appearances by central bankers such as Yellen, Draghi and Carney together with Eurozone GDP will likely prove the highlights of next week. Traders will focus on whether the markets can stabilize following a rocky start to 2014.
Janet Yellen, having just succeeded Ben Bernanke as chair of the Federal Reserve, will testify before the US Congress on Tuesday and Thursday. The testimony by the Fed chair is part of the semi-annual monetary policy report, which is mandated by the Humphrey- Hawkins Full Employment Act. Both Yellen’s prepared text as well as her answers to questions by Congressmen and Senators will be scrutinized closely as she is new to her post and a lot of analysts are still becoming familiar with her way of communication. Her views on the circumstances that would call for interest rate hikes, as well as on the pace of tapering are going to be particularly key.
Staying on the topic of central banks, Mark Carney’s press conference on Wednesday will be important for the pound. Carney will speak on the publication of the Bank of England’s quarterly inflation report. What the market will be looking for is for the likely revision of the forward guidance rule that targeted unemployment at 7% before raising interest rates. With the latest unemployment rate announced at 7.1% but with the Bank unwilling to raise rates in the foreseeable future, Carney will need to explain the Bank’s position more clearly.
With respect to the euro, this is expected to be a mostly quiet week, with the possible exception of a Draghi speech on Wednesday. The highlight of the week for the euro will be the announcement of preliminary 4th quarter GDP figures for the Eurozone, Germany, France and Italy. With the Eurozone posting anemic growth of 0.1% during the third quarter, economists expect growth to come in at 0.2% in Q4; an improvement over the third quarter but still a fairly anemic growth rate when annualized. The takeaway message analysts will look for will be that the Eurozone is continuing on its path of slow recovery.
It will also be a relatively quiet week for the yen as the only important data out of Japan will be machinery and machine tool orders on Wednesday as well as current account and consumer confidence on Monday. Tuesday will be a Bank Holiday for Japan.
The yen will probably remain sensitive to the prevailing risk sentiment. With stock markets trying to rally and recover some of the lost ground since the beginning of the year, any further strength in emerging and developed stock markets could lead to yen weakness.
In other economies, China will announce its trade balance together with imports and exports on Tuesday and inflation figures on Friday. Asia will be back on full throttle on Monday following this week’s Lunar New Year holidays. In Australia, the employment report will be released on Thursday and it will be interesting whether it will help the aussie to climb above 0.90 against the dollar.
Appearances by central bankers such as Yellen, Draghi and Carney together with Eurozone GDP will likely prove the highlights of next week. Traders will focus on whether the markets can stabilize following a rocky start to 2014.
Janet Yellen, having just succeeded Ben Bernanke as chair of the Federal Reserve, will testify before the US Congress on Tuesday and Thursday. The testimony by the Fed chair is part of the semi-annual monetary policy report, which is mandated by the Humphrey- Hawkins Full Employment Act. Both Yellen’s prepared text as well as her answers to questions by Congressmen and Senators will be scrutinized closely as she is new to her post and a lot of analysts are still becoming familiar with her way of communication. Her views on the circumstances that would call for interest rate hikes, as well as on the pace of tapering are going to be particularly key.
Staying on the topic of central banks, Mark Carney’s press conference on Wednesday will be important for the pound. Carney will speak on the publication of the Bank of England’s quarterly inflation report. What the market will be looking for is for the likely revision of the forward guidance rule that targeted unemployment at 7% before raising interest rates. With the latest unemployment rate announced at 7.1% but with the Bank unwilling to raise rates in the foreseeable future, Carney will need to explain the Bank’s position more clearly.
With respect to the euro, this is expected to be a mostly quiet week, with the possible exception of a Draghi speech on Wednesday. The highlight of the week for the euro will be the announcement of preliminary 4th quarter GDP figures for the Eurozone, Germany, France and Italy. With the Eurozone posting anemic growth of 0.1% during the third quarter, economists expect growth to come in at 0.2% in Q4; an improvement over the third quarter but still a fairly anemic growth rate when annualized. The takeaway message analysts will look for will be that the Eurozone is continuing on its path of slow recovery.
It will also be a relatively quiet week for the yen as the only important data out of Japan will be machinery and machine tool orders on Wednesday as well as current account and consumer confidence on Monday. Tuesday will be a Bank Holiday for Japan.
The yen will probably remain sensitive to the prevailing risk sentiment. With stock markets trying to rally and recover some of the lost ground since the beginning of the year, any further strength in emerging and developed stock markets could lead to yen weakness.
In other economies, China will announce its trade balance together with imports and exports on Tuesday and inflation figures on Friday. Asia will be back on full throttle on Monday following this week’s Lunar New Year holidays. In Australia, the employment report will be released on Thursday and it will be interesting whether it will help the aussie to climb above 0.90 against the dollar.
Related Posts: