A Week in the Market: Nobody is Willing to Take Any Risks (13-17 February)
Investors are interested in safe assets that favour the US currency, but how long this will last is an open question.
USD: inflation in priority
The key publication this week will be the US Consumer Price Index report for January. It is assumed that year-on-year inflation has fallen from 6.5% to 6.2%, while month-on-month inflation could rise by 0.5% after a 0.1% decline in December. This would be a strong support for the USD.
GBP: remains in the 1.20-1.22 range
Investors will focus on the release of employment market data for December and January. The unemployment rate could remain around 3.7%, while average wages for October - December could fall to 6.2%. Jobless claims in January could drop from 19,700 to 17,900. The GBP exchange rate will remain in the 1.20-1.22 range assuming there are no surprises from the statistics.
AUD: Pressure is rising
Australia will report on its consumer confidence and business sentiment indicators. These indicators could decrease, which would put more pressure on the AUD's position.
JPY: backed by GDP
The Japanese yen is weakening gently, also on the back of the pressure from the US dollar. The JPY could be supported by the release of Japan's Q4 GDP report. The economy could expand by 2% y/y and 0.5% q/q, which would be an optimistic result.
CAD: no support
Canada will release its data on manufacturing and wholesale sales, as well as the producer price index. If the statistics do not provide enough support for the CAD, the decline could intensify.