General, Forex

Week Ahead market preview: Corporate earnings look set to dominate

George Walker, Friday, 17 January 2020

US markets once again traded record highs last week following the long awaited ‘Phase One’ trade agreement signing between the United States and China. Although there are still many questions remaining about the long-term implementation, for now, this has been viewed as a tangible step forward. Mixed earnings from the financial sector in the US might have hindered further progress as we saw forecast beating results from J P Morgan and Citi Group, while lackluster numbers from sector peers Bank of America and Goldman Sachs disappointed slightly.

US Corporate behemoths continue to release earnings over the coming week with names such as Capital One Financial, UBS AG, Johnson & Johnson, Procter & Gamble, Intel Corporation, American Express and the first of the influential FAANG equities Netflix. A solid round of earnings could continue to see further upside, whereas if earnings start to come in lower than expected, this could quickly see investors cash in on any profits currently being sat on. Results can see dramatic moves in equities and therefore the index they are listed on as they can often be a read across into sector peers causing exaggerated moves. Traders will need to be continually aware of times and dates of company announcements which are listed in the calendar below.

On the macro data front, we see four central banks update the markets on their latest stance on interest rates and monetary policy. First up is the People’s Bank of China on Monday morning, the Bank of Japan on Tuesday followed by the Bank of Canada on Wednesday and finally the European Central Bank Thursday. Although no drastic changes are expected, economic outlook and forward guidance will be key to pay attention to see if there are any hints about near-term changes. The native currencies could see large swings if there are any surprises so it’s worth monitoring the updates as they happen.


USDJPY

The USD has been strengthening against JPY so far since the turn of the year as traders have sought to switch funds into riskier assets such as equities for a number of reasons. The yen is often viewed as a safe haven asset during times of uncertainty. The US and Iranian tensions saw sharp initial gains before subsiding and the potential uncertainty surrounding the ongoing negotiations between the US and China about tariffs and implementing the agreement seem to have seen concerns moderately reduce.

Recent comments from the Bank of Japan Governor Kuroda suggested that they expect interest rates and monetary policy to remain unchanged for as long as is needed. This does however beg the question of how they intent to boost the consumer inflation level from the current 0.5% to the target goal of 2%. The most common practice central banks use for this is by cutting the current interest rate. In the early hours of Tuesday morning we get the official Interest Rate Decision and Monetary Policy Statement. Although no change is expected, could there be a change of language and potentially a hint at a future change in interest rates?


USDCAD

After a relatively flat week for the USDCAD pairing, eyes will focus on the upcoming Interest Rate announcement and Monetary Policy Statement from the Bank of Canada. 2020 has seen the Canadian dollar pick up from 15-month lows against the greenback as expectations of an imminent rate cut in January from the Federal Reserve have begun to subside. Although the benchmark interest rate is expected to be unchanged at 1.75%, comments made in the press conference about forward guidance on global trade could provide hints to see if any plans on changing rates or policy are on the horizon. Being a major exporter of oil and other commodities, Canada could benefit from clarity surrounding the global trade outlook. Could there be any concerns over this for the BoC?


EURUSD

The bullish uptrend has continued into 2020 as the ‘wait and see’ stance adopted by the European Central Bank since the appointment of Christine Lagarde as President has lead traders to presume there will be no immediate action on amending current policy measures. The ECB has previously resumed Quantitative Easing (QE) whilst holding rates at rock bottom in order to boost the struggling eurozone. Forward guidance will be key to currency movements as Christine Lagarde has previously mentioned an overhaul of current strategies, the way analysis is carried out and subsequent decisions are made including the seemingly unachievable 2% inflation target, which could be revised down to 1.5%. Will we see any meaningful differences in approach?

All times indicated are GMT.


ECONOMIC CALENDAR (all times are GMT)

Monday, 20 January

USD Martin L. King Day

01:30 CNY PBoC Interest Rate Decision

04:30 JPY Industrial Production

07:00 EUR Eurogroup Meeting

07:00 GER Producer Price Index

21:30 NZD Business NZ PSI

UK Company Announcements:

N/A

US Company Announcements:

N/A

Tuesday, 21 January

00:00 EUR EcoFin Meeting

03:00 JPY BoJ Monetary Policy Statement

03:00 JPY BoJ Interest Rate Decision

03:00 JPY BoJ Outlook Report

09:30 GBP Claimant Count Rate

09:30 GBP Claimant Count Change

09:30 GBP ILO Unemployment Rate

09:30 GBP Average Hourly Earnings Including Bonus

09:30 GBP Average Hourly Earnings Excluding Bonus

10:00 EUR ZEW Survey – Economic Situation

10:00 GER ZEW Survey – Current situation

10:00 GER ZEW Survey – Economic Situation

13:30 CAD Manufacturing Sales

13:55 USD Redbook Index

23:30 AUD Westpac Consumer Confidence

UK Company Announcements:

IG Group Holdings

Dixons Carphone

US Company Announcements:

Netflix

Capital One Financial

UBS AG

TAL Education Group

TD Ameritrade Holding Corporation

United Airline Holdings

Halliburton Company

Wednesday, 22 January

09:30 GBP Public Sector Net Borrowing

11:00 GBP CBI Industrial Trends Survey – Orders

13:30 USD Chicago Fed National Activity Index

13:30 CAD BoC Consumer Price Index Core

13:30 CAD Consumer Price Index

14:00 USD Housing Price Index

15:00 USD Existing Home Sales

15:00 USD Existing Home Sales Change

15:00 CAD BoC Rate Statement

15:00 CAD BoC Interest Rate Decision

15:00 CAD Bank of Canada Monetary Policy Statement

16:15 CAD BoC Press Conference

21:30 USD API Weekly Crude Oil Stock

23:50 JPY Imports

23:50 JPY Exports

UK Company Announcements:

Sage Group

US Company Announcements:
Johnson & Johnson

Abbott Laboratories

ASML Holding N.V.

Texas Instruments Inc

Las Vegas Sands Corp

Progressive Corporation

Prologis Inc

Thursday, 23 January

00:00 AUD Consumer Inflation Expectations

00:30 AUD Fulltime Employment

00:30 AUD Employment Change

00:30 AUD Unemployment Rate

00:30 AUD Participation Rate

04:30 JPY All Industrial Activity Index

05:00 JPY Coincident Index

05:00 JPY Leading Economic Index

12:45 EUR ECB Interest Rate Decision

12:45 EUR ECB Deposit Rate Decision

13:30 EUR ECB Monetary Policy Statement and Press Conference

13:30 USD Continuing Jobless Claims

13:30 USD Initial Jobless Claims

15:30 USD EIA Natural Gas Storage Change

16:00 USD Kansas Fed Manufacturing Activity

16:00 USD EIA Crude Oil Stocks Change

21:45 NZD Consumer Price Index

22:00 AUD Commonwealth Bank Manufacturing PMI

22:00 AUD Commonwealth Bank Service PMI

22:00 AUD Commonwealth Bank Composite PMI

23:30 JPY National CPI ex Food, Energy

23:30 JPY National CPI ex-Fresh Food

23:30 JPY National Consumer Price Index

23:50 JPY BoJ Monetary Policy Minutes

UK Company Announcements:

N/A

US Company Announcements:
Procter & Gamble Company

Intel Corporation

Comcast Corporation

Union Pacific Corporation

Starbucks Corporation

Friday, 24 January

08:30 GER Markit Manufacturing PMI

08:30 GER Markit Services PMI

08:30 GER Markit PMI Composite

09:00 EUR Markit Manufacturing PMI

09:00 EUR Markit Services PMI

09:00 EUR Markit PMI Composite

09:30 GBP Markit Manufacturing PMI

09:30 GBP Markit Services PMI

13:30 CAD Retail Sales

13:30 CAD Retail Sales ex Autos

14:45 USD Markit Manufacturing PMI

14:45 USD Markit Services PMI

14:45 USD Markit PMI Composite

18:00 USD Baker Hughes US Oil Rig Count

UK Company Announcements:

Marstons

US Company Announcements:
NextEra Energy Inc

American Express

Air Products and Chemicals Inc

Ericsson

Share article