FX MARKET UPDATE: What To Watch This Week

 The G7 meeting, held in Iqaluit, Canada, over the weekend, left markets with little to chew on
 G7 officials maintained their commitment to stimulus measures and timely exit strategies
 The current environment remains conducive to more USD and JPY buying and selling of currencies such as the AUD, NZD, CAD, GBP, NOK, SEK, ZAR etc
 Ironically, the US and Japan have arguably more severe deficit/debt concerns than some of the European countries under pressure but as most of Japan’s debt is held domestically there is little worry of a collapse in JGBs
 The US January jobs report, released at the end of last week, will give little direction to markets in the week ahead. Although the 20k drop in payrolls and revisions to past months were slightly disappointing, the surprise drop in the unemployment rate was positive
 This week, January US retail sales report and December trade balance are worth watching, with the market expecting a rise in US retail sales to firm a, thus far, faltering economic recovery
 For the week ahead, the risk off tone is set to continue though the moves are looking increasingly stretched
 The USD, JPY and CHF will remain on the front foot
 EUR is set to continue to struggle against the background of Eurozone deficit concerns. After breaking 1.40 last week, 1.35 is the next target
 AUD may also struggle following the latest RBA meeting where interest rate expectations were altered
 UK markets will focus on the Quarterly Inflation Report from the Bank of England
 Prospects of a hung parliament will weigh on GBP, particularly as the BoE has not ruled out further asset purchases

These are the salient points kindly contributed by Mitul Kotecha, Managing Director & Head of Global Currency Strategy at Calyon. To view the full discussion, please click here to visit the original post on his website; The Econometer