Top news, that will move the markets this week

The global financial markets will focus on the Fed's meeting, which will be the last under Janet Yelan's leadership before it surrenders Jerome Powell's chairmanship.

As we are going through February this week, US employment data on Friday will be the focus of traders and investors. Meanwhile, in Europe, investors will expect monthly inflation figures to assess how quickly the European Central Bank will start to terminate its asset purchase program. In the UK, traders will focus on two business, manufacturing and construction reports. The data is crucial to Bank of England and its subsequent monetary policy. Better data will beat GBP in the strong upward trend and will give BoE more reasons to raise interest rates.

In Asia, investors will closely monitor the monthly production data in China against the background of the recent signs that the momentum of the second largest economy in the world remains strong.

Here's the details and where to look for profits during the week

1. FED Interest rate decision

The Federal Reserve is not expected to take action on interest rates at the end of its two-day meeting on Wednesday. The central bank will publish its statement after the meeting at 21:00 GMT + 2 and investors will seek a change in tone that could indicate more clearly the interest rate increase in the coming months. This week will be the last FED meeting, led by Janet Yellen, before being replaced by Jerome Powell. Most economists believe the Federal Reserve will raise interest rates in March, followed by another increase in June and a third in December.

We expect prudence in the dollar and the indices before the Fed decision is announced and increased vigor in the minutes thereafter, as the traders will accumulate the meeting report. If we see Hawkish's comments from the Fed, we expect the USD to stabilize and to mark an increase, or else stay close to the bottom.

2. Non Farm Payrolls

On Friday, we expect data on new jobs in the United States. Market participants expect new jobs to reach 180K in January from 148K in December when the figure surprised the markets and supported the USD decline. If this time we observe worse data than expected, the likelihood that a large number of institutional traders will close their dollar-denominated positions will increase, and this in turn will further curtail the currency. We expect the USD to be traded more conservatively before the Fed's decision and before the data on new jobs is published.

Meanwhile, the reporting season is in full swing and this week we expect the financial reports of one-fifth of the SP500 companies. Focus will be on major technology companies such as Facebook, Apple, Amazon, Alphabet, Microsoft and Alibaba, who are likely to get the most of the attention.

3. Inflation in the euro area

The euro zone will release inflation data for January at 12:00 noon on Wednesday. The consensus is that consumer prices have risen by 1.3%, slightly slowing down from 1.4% in December, and this is far below the target of the European Central Bank - just under 2%. Germany, France, Italy and Spain will produce their own consumer price index reports throughout the week. In addition to inflation data, the euro area will also publish a preliminary quarterly economic growth report, which, if left strong, could move the European Central Bank one step closer to completing the mass stimulus program.

4. PMI data in UK manufacturing and construction

Britain will publish the activity report in the manufacturing sector in January on Thursday, followed by a report on the construction sector on Friday. Industrial PMI is expected to decline to 56.5 from 56.3 months earlier, while construction activity is expected to drop slightly to 52.0 from 52.2.

Data released last week showed that the British economy unexpectedly accelerated the past three months of 2017, revealing that Brexit still has an impact on the economy, but not as bad as investors expected.

The policy will also be in focus as market participants do not rely on any news on the ongoing Brexit talks. However, if there are such, we expect increased GBP volatility.

5. Production PMI from China

Chinese Federation of Logistics and Purchases will release production activity data in January on Wednesday, with expectations for a modest decline to 51.5 for data from 51.6 in December. Caixin's production index, which focuses more on small and medium-sized businesses, is expected Friday. The survey is expected to drop by 0.2 points to 51.3. China's economy grew by 6.8% in the fourth quarter

Source: Bloomberg Pro Terminal

Jr Trader Petar Milanov

Read more:

• Dow Industrials Falter, Oil Climbs After U.S. Airstrike Kills Iranian Military Leader
• Next week in one post 30.12.2019 – 03.01.2020
• Money Flow before the start of European trading this morning
• The 5 Major Market Engines in 2020
• Money Flow before the start of European trading this morning