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It’s a big week for central banks with rate announcements in Europe, the UK and the US. Daily FX analyst, Warren Venketas, joins IGTV’s Jeremy Naylor to look at the descending triangle for the Dollar Index.  Jeremy Naylor | Writer, London | Publication date: Friday 27 January 2023 These sorts of patterns usually resolve on the downside, however, as Warren points out the risk here is the Fed statement may have a hawkish tinge to it. This would have a destabilising effect on the descending triangle as a continuation pattern and send the DXY trade up. Where will it go? Listen in.    Â
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Early Morning Call: busy week ahead with US earnings, central banks and US job report The dominating theme this week is central bank meetings with rate decisions from the Fed, BoE and ECB.  Jeremy Naylor | Writer, London | Publication date: Monday 30 January 2023 Central banks It's a big week for central banks, and things kick off tomorrow, Tuesday 31st January, when the Federal Open Market Committee (FOMC) will begin its two-day meeting. It's expected to deliver another rate hike, after seven in 2022, although at a much slower pace. The market expects a 25-basis point (bp) rise in the Federal Funds rate to between 4.50-4.75%. The Fed's official stance has recently changed as US inflation seems to have peaked. In December the pace of inflation decelerated for a sixth straight month, rising to 6.5%, its lowest level since October 2021. US central bankers want to continue to raise rates but much more slowly, to see how the economy is responding to the previous hikes, and to make sure not to go too far. Then on Wednesday 1 February, it will be the Bank of England's (BoE) turn to decide on its rates. With inflation at 10.5% in December, higher than in the US and the eurozone, with wages excluding bonuses rising at their fastest rate since records began in 2001, the BoE is likely to raise its main interest rate for a 10th consecutive time by half a percentage point to 4%. At its last meeting in December, the Monetary Policy Committee (MPC) voted for a 50-basis point hike to 3.5%. But the vote was split three ways. Two members voted to end the rate rises, while one backed a larger three-quarter point move. According to Reuters, economists see a similar split next week, because of the uncertainty around inflation. How fast will it fall? Is there a risk of bottoming out above the BoE's target? The same economists surveyed by Reuters expect the BoE to trim its forecast for end-2023 inflation to 3-4% from over 5% in November. As for the hike cycle, they see just one more rate rise, to 4.25% in March, while financial markets see the end of the tightening cycle mid-2023, at 4.5%. On Thursday, European Central Bank (ECB) is seen hiking by another 50-basis points to 3%. There is little doubt about that, as ECB members made sure in the last couple of weeks to reiterate that they were very much in agreement with Christine Lagarde's scenario of another significant hike. The ECB is also further away from reaching the limit of its rate hikes. It started its tightening cycle later than many central banks, and only raised its main rate by a total of 250-basis points in 2022, compared with 325 basis points for the BoE, and 425-basis points for the Federal Reserve (Fed). NFPs The other big event this week is non-farm payrolls (NFPs) on Friday. Economists anticipate 185,000 job creations in January, following 223,000 in December. The unemployment rate should rise one notch to 3.6%, and average hourly earnings are forecast to increase by 0.3% month-on-month (MoM), 4.3% year-on-year (YoY). At 9am, we'll know the first estimate of Germany's GDP growth rate in the fourth quarter (Q4). Economists anticipate it to be flat quarter-on-quarter, and a rise of 1.3% year-on-year. Equities Elsewhere on the equity markets, Ryanair said it is confident it can sustain its profitable run into next year and beyond. Europe’s largest low-cost airline’s profit after tax in the fiscal third quarter through December reached €211 million, compared with a loss of €96 million a year earlier. That's less than the estimate for €263.3 million by Bloomberg. The company reiterated its full-year (FY) profit outlook range of €1.325 billion to €1.425 billion, which Ryanair had raised earlier this month. Philips announced this morning it will part with 6,000 jobs to restore its profitability. This follows the recall of respiratory devices that knocked off 70% of its market value. Philips reported fourth quarter adjusted EBITA of €651 million compared to €647 million a year before. According to Bloomberg, analysts expected €383.1m. Because of the recall of these ventilators, Philips had to take an impairment charge, which means that in net terms, the group posted a loss of posts of €105m. Renault and Nissan have found an agreement to restructure of their two decade old alliance. Renault will reduce its stake in Nissan to 15% from around 43%, transferring the 28% stake in the Japanese automaker to a French trust, which will the sell these shares worth around $4.1 billion at current market values. As part of the deal, Nissan will invest in Renault's new battery-electric vehicle unit. US earnings US earnings publications continue this week with Pfizer, AMD, Caterpillar, Exxon Mobil, McDonald's, and General Motors on Tuesday. Meta Platforms and Altria will report on Wednesday, followed on Thursday by Amazon.com, Apple, Alphabet, Ford Motor, and ConocoPhillips. Commodities OPEC+ Joint Ministerial Monitoring Committee (JMMC) is due to meet virtually on Wednesday. According to Reuters, citing five OPEC+ sources, the organisation is likely to maintain its current oil output policy. Note that this is not a full OPEC+ meeting. No decisions or recommendations are expected, the JMMC will only discuss the economic outlook and the scale of Chinese demand. At its last meeting in December, the group left its policy unchanged, and their next full meeting is not scheduled until June. In other news, Baker Hughes total rig count remained at 771 last week. Oil rigs in operation fell by four to 609. This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.
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