What 3 events will traders be watching this week?

*please note; The author operates from UTC +13 when determining the schedule for data releases.

Tuesday 25 January:

NAB . Business Trust

NAB business confidence from Australia hits the market early Tuesday afternoon.

As such, we will probably see some positive follow-up in the AUDUSD currency pair, which is currently trading at 0.71746, down 1.4% since the beginning of the year.

The index may rebound after the sharp decline in November, falling to 12 points from 20 points in the previous report. Several factors have occurred recently that could bring a lot of positivity to the Australian business community. Perhaps the most impactful event will be the easing of monetary policy in China, Australia’s largest trading partner.

There is scope for further easing in China’s loan rates and it is expected that the People’s Bank of China will use them over the coming months to help support sluggish economic activity. Australia should be one of the beneficiaries of such a policy and improve Chinese economic activity.

Thursday January 27

Bank of Canada interest rate decision

Fed rate decision

Two important interest rate decisions will be presented on Thursday.

The first is the Bank of Canada (BoC) interest rate decision, which is due at 4 NZDT in the morning.

The Bank of Canada is dealing with high inflation in 30 years (4.8% YoY through December), however it may be reluctant to raise rates sooner than March. The Bank will likely be waiting for the Anglo-Colombian floods and Omicron spread to subdue it until initiating its first rate hike.

With that said, the market may have already partially pricing in a 25bp rate hike which could leave the Canadian dollar weak if the BoC does not deliver what is expected on Thursday.

The second interest rate decision from the US Federal Reserve is scheduled for Thursday at 8:00 am. I’m sure most of us will be watching the ensuing swings in the US dollar, following the announcement by Jerome Powell and his team. USDJPY and NZD/USD may be some of the biggest movers of the day, as the USD seeks to recover some of its recent losses against the USD and further rise against the latter.

While a rate hike isn’t likely on Thursday, investors will want to know if the Fed will raise the rate hike schedule. As it stands, the market anticipates a rate hike in March, the first of many that the Fed will have to enact to combat 40-year high inflation in the US.

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