The week ahead is full of economic events capable of moving financial markets. If we add to the economic data the volatility in the U.S. stock markets, we may say that the week ahead is an interesting one.
Two central banks announce their rate decision this week – the Bank of England (BOE) and the Reserve Bank of Australia (RBA). Out of the two, the BOE’s decision is more important for the FX traders because it is the first time after Brexit when the bank expresses its view on the economy and the road ahead.
As this is the first trading week of the month, the Non-Farm Payrolls (NFP) in the United States is released on Friday. In other words, the focus this week is on the GBP and the USD.
GBP and USD in Focus During the NFP Week
As usual during NFP week, PMI and ISM data will also be released in Europe, as well as the U.S. respectively. Traders will have a close look at the employment component of the ISM in the United States to form an idea about the possible outcome of the NFP report later in the week. Also, the ADP, or private payrolls, released two days ahead of the NFP, help.
The BOE’s decision on Thursday is the event of the trading week. The British Pound (GBP) traded with a bid tone ever since the Brexit deal was announced in late December 2020, but that may change once the BOE releases its statement this week. The recent scandal regarding AstraZeneca vaccine deliveries in Europe was quickly attributed to Brexit, and should things not resolve soon, we may see the tensions spilling over to the currency market too.
The week ends with the NFP report – a critical one this week after the previous report showed that the United States economy lost over 100k jobs. If the U.S. economy shows signs of life and starts to add jobs again, traders will see it as a result of the vaccination campaign that runs a full speed in the United States.
All in all, a critical week ahead, with two major currencies in focus – the GBP and the USD.