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Forex – Weekly Outlook: January 28

© Reuters.

Investing.com – This week, investors will be focusing on the Federal Reserve's first meeting of the year as well as an expected update on fourth quarter growth in the US and the US government employment report for January.

The ongoing trade negotiations between the US and China will also be in the spotlight.

The Fed will end its two-day policy meeting on Wednesday and are expected to keep rates steady after raising them in December for the fourth time in 2018. The government has said it will raise rates twice this year, but some authorities have recently adopted more dovish tone.

Investors will be hoping for more clarity about the possible future monetary policy stance at the Fed's meeting's press conference, Jerome Powell. Last year, Powell announced that he would hold a press conference after each policy meeting, a change from the previous quarterly schedule.

On Friday, the Labor Department will release its non-farm payroll report for January, which will provide information on the overall health of the US economy and the potential impact of the partial shutdown of government. The consensus forecast is a gain of 160,000 jobs after an impressive reading in December, when the economy added 312,000 jobs.

The US is expected to post quarterly figures on fourth quarter gross domestic product on Wednesday, but data may be postponed as a result of the recent shutdown. Meanwhile, the Institute for Supply Management will unveil its latest US manufacturing index on Friday.

Chinese officials are expected to arrive in Washington on Wednesday to continue trade talks with the United States aimed at resolving the long-running trade war between the two countries. Officials have until March 1 to reach an agreement, after which US President Donald Trump said he could move ahead with new tariffs on Chinese imports.

The US dollar fell to a more than a week low on Friday after Trump announced a tentative agreement with lawmakers for three weeks.

The deal provided for three weeks of funding and a senior Democrat aide said the money the president required for a border wall is not included. on the inclusion of $ 5.7 billion to help pay for a wall along the vast US-Mexico border in any legislation to fund government agencies.

"The dollar's reaction has not been super strong because uncertainty remains," said Juan Perez, Tempus senior exchange trader in Washington.

"And it's also a temporary reopening. He was also really convinced that a permanent solution should be made," added Perez.

On Friday, the index fell 0.86% to 95.47, the weakest level since January 15, to a weekly fall of 0.55%. On Thursday, the index hit a three-week high of 96.37.

Paul Ashworth, chief US economist at Capital Economics in Toronto, said that Trump yielded "presumably … because of the damage that the shutdown is having on its own approval ratings, particularly now that the shutdown is beginning to have an impact broader ".

The recovery rebounded on Friday after a chairman of the European Central Bank dovish failed to change an already pessimistic assessment of the euro zone economy.

ECB President Mario Draghi warned on Thursday that a downturn in the euro zone's economy may be more pronounced than previously thought, a move seen as a sign of a delay in the bank's first rise in interest rates .

Meanwhile, it hit a three-month high against the US currency after a report in The Sun newspaper that the Northern Unionist Democratic Party decided to offer conditional support to the contract of the British Prime Minister Theresa May next week.

, Investing.com compiled a list of significant events that could affect markets.

Monday, January 28

The Bank of Japan must publish the minutes of its last policy-setting meeting.

ECB President Mario Draghi will testify on economics and monetary policy to the European Parliament's Committee on Economic and Monetary Affairs in Brussels.

Bank of England Governor Mark Carney will speak at an event in London.

Tuesday, January 29

New Zealand should publish trade numbers.

The US should release a report on consumer confidence compiled by the Conference Board.

Wednesday, January 30

Australia should publish inflation figures.

The UK should report on net lending.

Germany is expected to release preliminary inflation figures.

The advance estimate of US fourth-quarter growth is scheduled to be released but may be postponed following the recent closure of the government.

The US should publish the ADP non-farm payroll report as well as pending home sales data.

The Federal Reserve must announce its federal funds rate and hold a press conference to discuss the monetary decision at its first meeting of the year.

Thursday, January 31

China should publish data on manufacturing and service sector activity.

The euro zone should release a preliminary estimate of fourth-quarter growth as well as the latest numbers of unemployment.

Canada is expected to produce figures on monthly GDP growth and commodity price inflation.

The US is expected to release figures on personal income and spending, as well as data on the PCE price index and an analysis of business activity in the Chicago region.

Friday, February 1

China should publish its manufacturing PMI Caixin.

The United Kingdom should disclose data on activity in its manufacturing sector.

The euro area should publish preliminary inflation data.

The US is expected to close the week with the government's non-farm payroll report for January, along with an Institute of Supply Management report on manufacturing activity and revised data on consumer sentiment at the University of Michigan.

– Reuters contributed to this report

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