Weekly Market Recap: 10-14 January 2022

Key Developments

This was an eventful week with key economic releases, lots of Fed speakers, the start of the earnings season in the US and significant market moves.

On the Fed front, we heard nomination testimonies from Chair Powell and proposed for Vice-Chair Brainard on Tuesday and Thursday respectively.

Mr Powell was a bit reserved as he positioned the expected balance sheet run-off "at some point perhaps later this year" [1], while Ms Brainard was more hawkish, commenting that this could begin "as soon as asset purchases are terminated" [2].

US Headline CPI Inflation jumped 7% y/y on December, the highest since 1982.

Inflation in China though eased, as CPI rose 1.5% y/y, compared to +2.3% y/y prior.

Trade the News: View our Economic Calendar

US Retail Sales dropped 1.9% in December against +0.2 prior (revised), while Industrial Production dropped 0.1% versus +0.7% prior (revised).

The World Bank released its latest forecasts on Wednesday, slashing Global Growth for 2022 to 4.1%, from 4.3% in the June projections [3].

US President Biden nominated Sarah Bloom Raskin to serve as Vice Chair for Supervision of the Federal Reserve, and Lisa Cook and Philip Jefferson to serve as Governors.[4].

News around Covid-19 stayed on investor's radars, with Dr Hans Henri P. Kluge, WHO Regional Director for Europe warning on Tuesday: "At this rate, the Institute for Health Metrics and Evaluation (IHME) forecasts that more than 50% of the population in the Region will be infected with Omicron in the next 6–8 weeks". [5].

Market Movements

The US Dollar was heading towards a poor week against its major counterparts, as it finds it hard to benefit from the Fed's largely priced in tightening prospects.

It was losing around 1.5% against the Japanese Yen, while EUR/USD posted a noteworthy recovery and two month highs.

US stock markets were inching towards another negative week, whereas GER30 had an inconclusive performance.

USOil was closing in on his fourth straight profitable week while inflation fears and the Dollar's demise helped XAU/USD.

Corporate Activity

The latest earnings season got underway in the US, with Big Banks, such as JP Morgan reporting on Friday. Corporate reporting though was only a part of this week's activity, since we also had sales updates from German premium automaker BMW, delivery figures from US plane manufacturer and other news. Read more here.

Week Ahead (GMT)

The upcoming week is expected to be very busy, despite the fact that US stock markets will be closed on Monday for Martin Luther King, Jr. Day.

Inflation will remain in the spotlight since we expect CPI figures from the UK and Canada on Wednesday, followed by Eurozone and Japan a day later.

China kicks things off though with GDP, Industrial Production and Retail Sales on Monday, while UK and Canada also release Retail Sales on Friday.

Other than that, we expect Tuesday's UK Employment figures with an eye on wages, Thursday's employment stats from Australia and Bank of Japan monetary policy decision on Tuesday.

On the corporate earnings front, Netflix stands out as it reports on Thursday after the bell.

See the economic calendar here.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 14 Jan 2022 https://www.banking.senate.gov/hearings/01/04/2022/nomination-hearing

2

Retrieved 14 Jan 2022 https://www.banking.senate.gov/hearings/01/04/2022/nomination-hearing-1

3

Retrieved 14 Jan 2022 https://www.worldbank.org/en/news/press-release/2022/01/11/global-recovery-economics-debt-commodity-inequality

4

Retrieved 14 Jan 2022 https://www.whitehouse.gov/briefing-room/statements-releases/2022/01/14/president-biden-nominates-sarah-bloom-raskin-to-serve-as-vice-chair-for-supervision-of-the-federal-reserve-and-lisa-cook-and-philip-jefferson-to-serve-as-governors/

5

Retrieved 28 Jan 2022 https://www.euro.who.int/en/media-centre/sections/statements/2022/statement-update-on-covid-19-omicron-wave-threatening-to-overcome-health-workforce

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