Happy weekend, traders. 

During the previous week, the U.S. dollar surged to a four-month high against a basket of major currencies on Friday, supported by a robust U.S. nonfarm payrolls release that followed a spate of upbeat economic reports this week, a scenario which should keep interest rates constant for now.

The U.S. dollar also placed a two-month top versus Pound and the Canadian dollar, a six-week peak versus the Swiss franc, and a four-month high versus the single currency euro.

Nevertheless, the dollar shifted against the safe-haven yen, but that was more relevant to concerns about the coronavirus break in China. As the New York session advanced, the U.S. job report revealed it had a more significant influence on currency markets than the coronavirus.

Top Five Economic Events to Watch This Week

U.K. – Prelim GDP q/q – Tuesday – 9:30 GMT

We have 2 versions of quarterly GDP released about 45 days apart – Preliminary and Final. The Preliminary release is the earliest and thus tends to have the most impact. It’s a quarterly figure and typically places a stronger impact on Sterling.

The data is expected to show a 0.0% growth, less than 0.4% growth in the past. Well, this can be due to falling crude oil prices and increased uncertainties over Brexit. Moreover, the GDP is likely to follow alarming PMI surveys for the manufacturing, construction, and services sectors, which showed some risk aversion among the British corporate sector. 

UK – GDP m/m – Tuesday – 9:30 GMT

At 9:30 (GMT), the Office for National Statistics is set to announce fourth-quarter GDP growth of the United Kingdom. It’s released monthly, about 40 days after the month ends.

The GDP is forecasted to soar from -0.3% to 0.2%, forming sentiments that BOE won’t hike the interest rates, especially when economic growth is gaining momentum.

Speeches of Central Bankers – Tuesday 

EUR – ECB President Lagarde Speaks – 14:00 GMT

The European Central Bank President Christine Lagarde is due to deliver opening remarks at the presentation of the ECB Annual Report before the European Parliament in Strasbourg. This may or may not drive volatility in the market as Lagarde isn’t expected to extend forward guidance on ECB policy decision. 

USD – Fed Chair Powell Testifies – 15:00 GMT 

The Federal Reserve Chair Jerome Powell is due to testify on the Semiannual Monetary Policy Report before the House Financial Services Committee in Washington DC. 

Let’s see if Powell has anything to say about recent changes in tariff and trade activities, and how he plans to deal with this. Secondly, the discussion about macroeconomic factors like Inflation, GDP, and the unemployment rate will help us drive the sentiments regarding the rate hike. 

GBP – BOE Gov Carney Speaks – 15:35 GMT

The Bank of England Governor Mark Carney is due to testify before the House of Lords Economic Affairs Committee in London at 15:35 GMT. As head of the central bank, which controls short term interest rates, he has more influence over the nation’s currency value than any other person. Traders scrutinize his public engagements as they are often used to drop subtle clues regarding future monetary policy. 

Investors will pay closer attention to the BOE interest rate decision as weaker economic events are creating a massive sentiment of a rate cut and would be looking for Carney’s remarks on it. 

NZD – Monetary Policy Meeting – Wednesday – 1:00 GMT

The Reserve Bank of New Zealand is due to release the interest rate decision at 1:00 GMT, while economists aren’t expected to cut interest rates from 1.00% to 0.75%. The RBNZ was forecasted to lower rates during the previous policy decision but later decided not to cut, making NZD bullish. 

There has been increased pressure from other central banks who have been also cutting rates, such as the FOMC and RBA. There is a degree of both pre-empting any downturn and also trying to compete with the other central banks.

Governor Ore will be speaking in the next hour at 2:00 GMT, and there is now a massive focus on what he has to say. Both in regards to massive cut and also what he thinks will be happening going forward for the N.Z. economy.

U.S. Inflation Figures – Thursday – 13:30 GMT

The Core Consumer Price Index (CPI) covers the changes in the price of goods and services, excluding food and energy. A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

Lately, the U.S. Federal Reserve has been displaying impediment with the lack of inflation – which is a global aspect. The numbers for December will likely record that the Core Consumer Price Index – the most vital number – settled around 2.3% reported in January. Both headline and core monthly figures carry forecasts for an expansion of 0.2%.

The U.S. annual inflation rate accelerated to 2.3% in Jan 2020 from 2.1% in the prior month and above the market forecast of 2.0%. It’s the highest inflation rate since November 2018, as food inflation was slight while energy prices sank at a much slower pace.

U.S. Retail Sales m/m – Friday- 13:30 GMT

It’s the primary gauge of consumer spending, which accounts for the majority of overall economic activity. Economists aren’t expecting any change in this month’s retail sales data as it’s forecasted to be 0.3% vs. 0.3% during the previous month. Considering this, the traders are anticipated to continue trading the dollar with a bearish bias.

USD – Core Retail Sales m/m

Alongside, the core retail sales will also be in focus as it shows a change in the total value of sales at the retail level, excluding automobiles. The data is due at 13:30 GMT, and the retail sales are expected to drop to 0.3% vs. 0.7% beforehand.

Good luck, traders, and stay tuned to FXLeaders Economic Calendar for live market updates.