Welcome to our weekly economic briefing, where we're set to kick off a series of impactful releases starting Tuesday, January 23rd.
This week, watch for major announcements including the Bank of Japan's interest rate decision, which could sway the $USDJPY pair, and the European Central Bank's key rate decision, potentially affecting the $EURUSD and European stocks. Also, keep an eye on the American Pending Home Sales, Canadian interest rate decisions, and the Eurozone's Composite PMI data – each capable of inducing significant market volatility.
Let's dive into the details!
🇯🇵 BoJ Interest Rate Decision
The active economic week this time begins on January 23rd at 4:30 GMT+2 with the Bank of Japan's interest rate decision. This release usually causes increased volatility in the $USDJPY pair. This occasion is no exception, as we see the Japanese Yen languishing near a multi-week low against the USD ahead of the BoJ decision. However, analysts predict that the rate will remain unchanged at -0.1%, as it has been for a long time.
Regardless of the outcome, you can include the $USDJPY pair in your trading portfolio and use the release's result for various decisions.
🇪🇺 S&P Global Composite PMI
The next important release will be published on Wednesday at 11:00 GMT+2 in the Eurozone. It will be the data on the monthly Composite PMI, which reflects the monthly weighted average dynamics of two PMI indices: the services sector and manufacturing. The results are used to assess the economic dynamics: growth or decline. Accordingly, this data could impact the $EURUSD and $DAX30.
Note that $EURUSD extends its gains for the second successive day, trading around 1.0910. However, how the pair will change after the PMI release remains a question.
🇨🇦 BoC Interest Rate Decision
On the same day, Wednesday, at 16:45 GMT+2, it's important to closely monitor the Bank of Canada's interest rate decision. The current rate stands at 5.00%, unchanged for exactly one year. This release is very important for the $USDCAD pair, which has snapped a two-day losing streak amid lower crude oil prices, and improved to near 1.3430. Analysts anticipate that the rate will remain unchanged. Nevertheless, heightened volatility in the Forex market is expected, taking into account all market changes.
🇪🇺 ECB Interest Rate Decision
On Thursday, January 25th, at 15:15 GMT+2, the European Central Bank will also announce its decision on the key interest rate. Currently, the rate is at 4.50%, which is lower than in Canada, the USA, and some other countries. If the rate does not decrease, it would indicate ongoing inflation in Europe. This could lead to volatility in the $EURUSD currency pair, as well as in the stocks of European companies.
🇺🇸 Pending Home Sales m/m
The final significant release of the week is the American Pending Home Sales for the past month. The Pending Home Sales Index (PHSI) measures changes in housing contract activity, serving as a leading indicator of real estate market activity. It's based on signed real estate contracts for existing single-family homes, apartments, and co-ops. Consequently, a higher index value is better for the real estate market, the US dollar, and the stocks of certain companies, as well as indices like Nasdaq, SPX500, and Dow Jones. The index is expected to increase by 0.1% compared to the previous month, so don't miss out!
That's it for this week! 👋
