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Forex Market Movers – January 2018

January 02, 2018

Last year closed with important performances that were not seen for a while, especially concerning Euro and Dollar.

The first one, strong on most of the main currencies (it was only a loser against the Polish zloty), gained more than 14% against the Dollar, a performance that had been missing since 2003.

Vice versa the Dollar suffered, in particular from May, an unexpected fragility, above all due to the substantial differential rates that characterized it with a -10% Dollar Index following three years of consistent growth.

Among the emerging currencies we can find mixed trends: a bad time for the Mexican Peso and the Turkish Lira, well done the Russian Ruble and, in the last part of the year, the South African Rand.

It will be an interesting 2018, with the new President of the Fed Mr Powell and the effects of Trump's economic policy testing reality. In Europe, Draghi will face its last full year at the helm of the ECB (his task will expire in October 2019) with the possibility that in the latter part of 2019 interest rates will move upwards.

Let's now see in details the main market movers of the first month of 2018.

United States

As usual the year starts with two important macro data on January 3rd (Ism Manufactory) and January 5th  (unemployment) published simultaneously with the minutes of the last meeting of December of the Federal Reserve (January 3rd). On January 5th also pay attention to the trade balance, factory orders and non-manufacturing ISM. The second decade of the month will begin with producer prices (11th) and inflation (12th). On the same day we will know the data about retail sales in December. Going forward, America will publish the industrial production data on January 17th at the same time as the Beige Book. Attention then on January 25th to the leading indicator followed by the data on the fourth quarter GDP on January 26th, the consumer confidence on January 30th and especially the FOMC on January 31st when we will be able to understand the path of the rise in US rates in 2018 .

Europe

Also in Euroland the highlight of the month of January will be the ECB meeting on January 25th. Before that date, inflation data (January 17th), industrial production (January 11th), German Zew (January 23rd), and Pmi (January 24th) will have to be followed closely. At the same time as the ECB meeting, the German IFO index, while January 30th will be the turn of the fourth quarter GDP.

UK

This year should define in details some important agreements between Europe and UK about Brexit. At the beginning of the month the publication of industrial production data (January 10th) followed by inflation on the 16th, retail sales on the 19th, unemployment on the 24th and on the data of the fourth quarter GDP the 26th.

Japan

Thanks to the data published at the end of January we will understand if Abenomics will be able to push the Japanese economy even at the beginning of 2018. Inflation on the 26th, unemployment on the 30th and industrial production on the 31st. The Bank of Japan will decide on rates on January 23rd.

Rest of the world

Among the G20 countries we can highlight three important monetary policy events:

Canada on January 17th

Turkey and South Africa on January 18th


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