Evdokia

Evdokia Pitsillidou, Head of Risk Management at easyMarkets. She specialises in commodities, options and currencies and loves to solve analytical problems and overcome challenges.

January is expected to be a highly active month in the financial markets. Economic data, monetary policy and the inauguration of a new US president may have direct implications on market behaviour and the performance of stocks indices, commodities and currency pairs.

Last year, easyMarkets introduced dealCancellation, a tool that allows traders to cancel losing deals within 60 minutes to have any losses returned to them. As volatility rises, so too does the risk of loss. Below is a list of key market-moving events in January that traders should closely follow from a dealCancellation perspective.

January 4: FOMC Minutes (December)

The minutes of the December 13-14 Federal Open Market Committee (FOMC) meeting will be released in the first week of January, and may give traders more insights into the central bank’s decision to raise interest rates for the first time in a year. A more hawkish Fed may trigger volatility in riskier financial assets, making the January 4 release a good candidate for dealCancellation.

January 6: US Nonfarm Payrolls (December)

A robust labour market was part of the Fed’s justification to raise interest rates in December. On January 6, the Labor Department will release its final jobs report of 2016. Another robust reading may solidify a sense of progress for the US labour market during 2016 and possibly give central bankers more scope to continue raising interest rates. Nonfarm payrolls rose by 178,000 in November, while the unemployment rate fell to 4.6%, the lowest since August 2007.[1]

January 11: UK Industrial Production, Manufacturing Production, Trade Balance (November)

November 11 could be a highly active day for British financial assets. The UK Office for National Statistics will report on industrial production, manufacturing production and the goods trade balance, giving traders more insights into the health of the British economy in the wake of the Brexit vote.

January 18: US CPI (December), Industrial Production (December), Federal Reserve Interest Rate Decision, Bank of Canada Interest Rate Decision

Many traders will be using dealCancellation on January 18 to prepare for a deluge of US economic data and monetary policy developments. On that day, the Labor Department will release its final consumer price index (CPI) report for 2016. Separately, the Federal Reserve will issue its December industrial production report.

The most closely watched event will take place at 2:00 pm ET when the Fed publicizes its first policy decision of 2017. While the US central bank may not raise rates in January, it may provide more tangible clues about the pace and timing of future rate adjustments. The Fed struck a surprisingly hawkish tone in December, raising expectations of a faster rate tightening cycle.

North of the border, the Bank of Canada (BOC) is also expected to announce its first interest rate decision of the year. The BOC almost raised rates in October, and may be looking to ease monetary policy further in 2017 as the economic recovery struggles to get off the ground.[2]

January 19: ECB Interest Rate Decision

Monetary policy will continue to dominate the headlines on January 19 when the European Central Bank (ECB) makes its first interest rate decision of the year. The ECB may not adjust monetary policy in January, but may seek to shore up support for its bond-buying program after the Bank reduced the size of its monthly purchases by €20 billion beginning in April.

January 27: US Fourth Quarter GDP, US Durable Goods Orders (December)

The US government will release preliminary fourth quarter GDP data on January 27. The US economy expanded at a faster 3.5% annualized rate in the third quarter, boosting optimism about the health of the recovery. The Q4 report is expected to solidify a sense of progress in the economy after a shaky first half of 2016.

Separately, the Commerce Department will also issue a report on December durable goods orders, a key proxy for manufacturing demand.

January 30: Eurozone Fourth Quarter GDP; US Personal Income and Outlays (December)

On January 30, the European Commission’s statistics branch will report on Eurozone fourth quarter GDP. Separately, the US government will issue its monthly report on personal income and outlays, which also includes data on core personal consumption expenditures, the Fed’s preferred measure of inflation.

January 31: BOJ Interest Rate Decision

The Bank of Japan (BOJ) will close out January with a key monetary policy statement. The BOJ shifted course on monetary policy back in September after a failed attempt at lifting the economy out of deflation. While the central bank will discuss the progress that has been made since the new program was announced, it might be unlikely to introduce any changes to monetary policy.

 

[1] Ana Swanson (December 2, 2016). ‘U.S. economy added 178,000 jobs in November; unemployment rate dropped to 4.6 percent.” The Washington Post.

[2] Sam Bourgi (December 26, 2016). “Weak Manufacturing Sector Highlights Canada’s Shaky Economic Recovery.” Economic Calendar.

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