GEMFOREX - weekly analysis

The week we have entered is set to be much quieter regarding economic data releases, however after last weeks Fed hike and the strong nonfarm payrolls report there is still a lot to process.

Regardless, here are the top 5 things to watch this week:

1.Fed Chair speech 

Fed Chair Jerome Powell will be making an appearance on Tuesday that will be closely watched by the markets, especially after Fridays US jobs report release. 

Said release reported 517k new jobs, around 3 times what was expected, and forced investors to adjust expectations over how hawkish the Fed may have to be in its efforts to control inflation. The same data may give the central bank more leeway to keep hiking rates, with investors fearing that such a move will plunge the economy into a recession.

On Tuesday, initial jobless claims numbers will be released, and several Fed officials will be making appearances.

2.Earnings season

Earnings season continues with media and consumer industry stocks at the forefront.

Releases include:

Walt Disney (NYSE: DIS), scheduled for Wednesday, and News Corp (NASDAQ: NWSA), scheduled for Thursday. The New York Times (NYSE: NYT) is due to report on Wednesday too.

PepsiCo (NASDAQ: PEP) and Kellogg (NYSE: K) will release on Thursday, which will offer insight into how consumers are coping with inflation. 

More than 90 S&P 500 companies are expected to post results in the coming week, while 190 have already reported.

3.Reserve Bank of Australia release

Back in November, the RBA hiked rates by a less-than-expected 25bps, amidst concern about the effects recent rate hikes were having on the Australian economy and the housing market.

In December this was followed by another 25 bps hike, pushing the headline rate to 3.1%, while the bank warned that rates were likely to increase in the coming months.

Now, the markets are expecting another 25 bps rate hike by the Reserve Bank of Australia on Tuesday. This is after inflation climbed to the highest level in 33 years in the last quarter, despite the RBA's aggressive tightening campaign.

In other releases, retail sales fell by the most since during the pandemic and house prices suffered their biggest drop in over 40 years.

Regarding the Aussie dollar, as long as China is reopening according to schedule, the currency should push higher.

4.The Eurozone news

Comments made by European Central Bank officials will be closely watched after last weeks 50 bps rate hike. Further hikes were all but promised for March.

ECB President Christine Lagarde referred to high core inflation to explain why “we have more ground to cover, and we are not done”.

Germany is to release January inflation data on Thursday. Economists are expecting it to accelerate again.

Before that, Germany is to release data on factory orders today, followed by a report on industrial production on Tuesday.

5.U.K. news

The U.K. will release GDP data on Friday, which is expected to show that the economy slowed in the fourth quarter and narrowly avoided a recession.

Last week the Bank of England said Britain remained on course for a recession this year, but it was likely to be less impactful than previously expected, due mostly to lower energy prices and weaker market interest rate expectations.

The BOE hiked rates for the 10thtime in a row last Thursday.  It was also said that the tide was turning in its battle against inflation.

Britain's economy has been hit by the energy crisis after Russia's invasion of Ukraine. It also suffered a drop in the size of its workforce along with low business investment and weak productivity growth in the wake of Brexit.

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