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Stock Market » Next week in the financial markets

Focus on the Bank of Canada and the FOMC

This week marks the return of major central bank meetings, with the Bank of Canada and FOMC meetings on Wednesday. There has been a lot of talk lately about rate hikes, but are any of the central banks ready to pull the trigger? Politics remains a hot topic in the UK as Boris Johnson defends his position as Prime Minister. In Eastern Europe, tensions continue to rise as Russia builds up its forces along the border with Ukraine. Will Russia invade Ukraine this week? Additionally, a huge stock market sell-off last week culminated in the collapse of Netflix. Microsoft, Tesla and Apple, among others, report their results this week. Will their results lead to a repeat of last week’s stock sell-off? There will be plenty of catalysts for volatility in the financial markets this week!

Bank of Canada

The Bank of Canada meets on Wednesday this week and will decide whether to raise interest rates from pandemic lows to 0.25%. Expectations for a rate hike are mixed, with markets pricing in almost a 60% chance of a rate hike. Since the last meeting on December 8, 2021, inflation has increased slightly from 4.7% to 4.8%, but this is the highest level since September 1991. Jobs are plentiful since the last meeting, the December’s report doubled expectations to +54,000 after November’s. Stellar impression of +153,700. There don’t seem to be any concerns on the labor front! This will be a tight call and could cause volatility across currency pairs, including the Canadian Dollar (CAD).

FOMC

The US Federal Open Market Committee (FOMC) also meets on Wednesday. However, unlike the BOC, markets are only pricing in a 5% chance of a rate hike at this meeting. Since the last meeting in December, inflation has reached the 7% mark, its highest level in almost 40 years. Fed members have been talking one after another about how the first rate hike is likely to come in March as they await the end of the bond-buying program. Note that although the Fed has indicated that the maximum employment requirements have been met, the average of the last two non-farm payroll reports has only been +224,000. Watch for comments on the March meeting, especially to Fed Chairman Powell at the press conference. These comments could cause volatility in the markets at all levels.

boris johnson

British Prime Minister Boris Johnson is still in trouble. Although coronavirus restrictions under Plan B have been eased, Johnson still faces an onslaught of attacks from bank advocates and the general public over partygate. First, former councilor Dominic Cummings accused Johnson of lying to Parliament about his knowledge of the party. Now, Conservative politician William Bragg has alleged that Johnson and his staff intimidated and blackmailed those who distrusted Johnson by encouraging embarrassing stories about them to be published in the press. The Cabinet Office’s second permanent secretary, Sue Gray, is investigating the partygate scandal and a report will be published shortly. If the report shows that Johnson violated the Covid restrictions, will that be the end of it for him? What will happen in the forex for the pound sterling? And by the way, Brexit talks resume this week on the Northern Ireland Protocol. Keep an eye out for this week’s headlines.

Russia

Will Russia invade Ukraine this week? It is a very fluid situation as both sides continue to build up their forces along the border. Russia says it will not invade, but with 100,000 troops on the border, the West thinks otherwise. In the latest attempt to end the conflict, US Secretary of State Anthony Blinken met his Russian counterpart Sergei Lavrov in Geneva for talks. The result: an agreement to keep talking. Larvrov said on Friday that Russia is awaiting an official response to his security requests from Blinken this week. Once again, keep an eye out for this week’s headlines!

business results

Netflix did just that last week when it revised down the number of net new subscribers for the first quarter to 2.5 million. Analyst estimates were 5.8 million. Were Netflix’s results the beginning of the end in the stock market for covid-era “stay at home” stocks? This week, we’ll know more as Microsoft and Apple report their results. In addition, IBM, Tesla, Visa and Mastercard will also report. A list of the main companies that could affect the markets with their earnings reports are: IBM, HAL, AXP, LMT, GE, VZ, MSFT, TXN, JNJ, T, BA, TSLA, INTC, BX, AAPL, MCD, MA, V, cat, CLC

Economic data

With the FOMC and Bank of Canada meetings this week, economic data takes a backseat. However, there are still major data points that could move markets, including preliminary global manufacturing and services PMIs, CPI for Australia and New Zealand, and the first glimpse of US GDP in Q4 and 2019. central PCE. Other important economic data are the following:

Monday – January 24, 2022

Flash Global Manufacturing and Services PMI
Mexico: Mid-month inflation rate (ENE)
United States: Chicago Fed National Activity Index (DEC)
Australia : NAB Business Confidence (DEC)
Australia : CPI (Q4)

Tuesday – January 25, 2022

Germany: Ifo Business Climate (JAN)
United States: S&P/Case-Shiller house prices (November)
United States: CB Consumer Confidence (JAN)
Japan: Summary of BOJ Views
New Zealand: trade balance (DEC)

Wednesday – January 26, 2022

Canada: Bank of Canada decision on interest rates
United States: New Home Sales (DEC)
United States: Fed decision on interest rates
crude oil inventories
New Zealand: CPI (4Q)

Thursday – January 27, 2022

Germany : Gfk Consumer Confidence (FEB)
United Kingdom: CBI Distributive Trades (JAN)
United States: Durable Goods Orders (DEC)
United States: GDP growth rate announced (Q4)
United States: PCE Adv Price (Q4)
United States: Pending Home Sales (DEC)
New Zealand: ANZ Roy Morgan Consumer Confidence (JAN)
Japan: Tokyo CPI (JAN)

Friday – January 28, 2022

EU: Economic Sentiment (JAN)
EU: consumer inflation expectations (JAN)
United States: personal income (DEC)
United States: Personal Expenses (DEC)
United States: PCE price index (DEC)
United States: Labor Cost Index (Q4)
United States: Michigan Consumer Sentiment Final (JAN)

See ” economic calendar

Chart of the Week: Netflix (NFLX) Weekly

Source: Tradingview, Stone X

Netflix shares hit new all-time trading highs for the week of November 15, 2021 at 700.99. In the two months since then, the stock has managed to return half of its gains from 2016 lows to recent highs, falling to the 200-week moving average at 422.63 and hitting 379.99 last week.

The weekly RSI turned from overbought in November 2021 to oversold, signaling that a rally is ahead in the stock market. On the weekly time frame, the first resistance is at the 200-week moving average.

Above are a number of horizontal resistance areas including 423.21 and 458.60. First support is at last week’s low at 379.99. Below this, NFLX stock price can drop to the 61.8% Fibonacci extension of the aforementioned time frame at 317.19 and then to horizontal support at 290.25.

What will move the financial markets this week?

You have many options to choose from! With the return of major central bank meetings this week, keep an eye out for rate hikes or clues as to when the first rate hikes will be.

Also keep an eye out for headlines from the UK on the future of Boris Johnson and Russia on an invasion of Ukraine. And don’t forget the trading results. Pay attention to the publications!

By Joe Perry, CMT, Forex.com » Official site

stock market forex.com

Disclaimer: The information and opinions contained in this report are provided for general information only and do not constitute an offer or solicitation to buy or sell foreign exchange contracts or CFDs. . Although the information contained in this document has been obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, and assumes no liability for direct, indirect, or consequential damages that may result from anyone’s reliance on such information. .

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