Summary:

• A range of services PMI prints scheduled for release today

• UK and Antipodean central banks to hold their meetings this week

• Important labour market data from Canada to be released on Friday

Taking a look at the Monday’s economic calendar we can see a wide range of the services PMI reading planned for release today. In the morning prints for the European economies will be released as well as for the Eurozone as a whole. In the afternoon USD will take the spotlight as ISM non-manufacturing reading is scheduled for release. What is more, ECB president Mario Draghi will speak at the European Parliament today during the debate on the ECB’s annual report.

9:30 am BST – UK, Services PMI for January. Index based on a survey among companies in the UK services sector. The UK services sector has been constantly expanding since July 2016. The latest print surprised a little to the upside showing value of 54.2 against 54.1 pts expected. This time market consensus points for a reading of 54.1 pts indicating small downside against prior print.

3:00 pm BST – US, Non-manufacturing ISM for January. The gauge measuring the activity and condition of the US non-manufacturing sector. This is a significant part of the US economy therefore USD traders may want to stay cautious as increased volatility on FX pairs tied with USD may appear. Last month’s print has shown the value of 56 pts missing forecasts of 57.8 pts heavily. This time market consensus points for a reading of 56.7 indicating an improvement of the US non-manufacturing sector condition.

What to watch for the remainder of the week?

The ECB and the Fed meetings are history but traders look forward to other central banks that will set the agenda this week. The Bank of England is the highest on this list but RBA and RBNZ will be in the spotlight as well. Canadian payrolls will be a fresh hint of a strength of economic recovery.

Bank of England decision, minutes and inflation report (Thursday, 12:00pm GMT)

This is going to be more important BoE meeting than usually. First of all, a quarterly inflation report is about to be published. While there’s been a lot of talk about the appreciation of the euro and how the ECB could be uncomfortable about it, the pound has been actually the second strongest G10 currency this year, outpacing the euro by far. GBPUSD is already at pre-Brexit vote levels and that could put brakes on the UK economy that’s already behind the EMU. While the ECB is not expected to increase rates this year markets pencil in at least one rare hike for UK. Will the Bank of England pour some cold water on these bets and hurt the pound in the process? We shall see on Thursday.  Affected markets: GBPUSD, UK100.  

Antipodean events: RBA decision  (Tuesday, 3:30am GMT), New Zealand employment (Tuesday, 9:45pm GMT), RBNZ decision (Wednesday, 8pm GMT)

Both Antipodean dollar have had a terrific start of the year. AUDUSD and NZDUSD rallied on global optimism and weakness of the US dollar. However, that could cause some discomfort for local central banks. Traders should watch the communication from the RBA and the RBNZ this week to judge a direction for these currencies. Affected markets: AUDUSD, NZDUSD.

Canadian payrolls (Friday, 1:30pm GMT)

The Bank of Canada has already lifted interest rates this year and traders are looking for more. Despite a solid momentum of recovery in Canada and resilient oil prices the CAD has had just a moderate success so far this year-  it’s the second worst G10 currency, just behind the US dollar. Will traders return to the Loonie? A solid local NFP report could help. Affected markets: USDCAD, EURCAD.

After failing to break above 78.6% retracement level of the post-Brexit plunged GBPUSD has began moving sideways. Will BoE help pound find its traction again? Source: xStation5