Weekly Market Recap: January 31 – February 04

Key Developments

Three major central banks announced their monetary policy decision this week, UK politics were in the spotlight, geopolitical tensions persisted, while Chinese stock markets were out on holiday in most days.

The European Central Bank (ECB) did not make any policy changes on Thursday, but President Lagarde did not rule out rate hikes in 2022, sending the Euro higher.

Earlier on the same day the Bank of England (BoE) had delivered its second 25 basis points rate hike in a row, with four members (out of nine) voting for a bigger increase.

On Tuesday, the Reserve Bank of Australia announced the end of its asset purchases, although it remained patient on interest rates, which remained at 0.1%. On Friday it released Monetary Policy Statement, upgrading its projections for inflation.

The week closed with a bang, as Friday's US Jobs report showed the addition of +467K payrolls in January, higher than expected. This boosted the US Dollar, as it increased rate hike calls.

Average hourly earnings rose +0.7% m/m vs +0.5% expected and prior, fueling inflation fears, while Unemployment ticked up to 4%, from 3.9% prior.

The week started with another missile interception, that was targeting the United Arab Emirates, which is a major oil producer. The situation around Ukraine remained tense with the US Department of Defense saying it would send approximately 3,000 service members to Romania, Poland and Germany.

OPEC and allies, a group known as OPEC+, did not surprise yesterday, by agreeing to adjust upward the monthly overall production by 400,000 barrels/day for the month of March 2022.

Political turmoil intensified in the UK after the release of Sue Gray's initial findings in regards to the Downing Street lockdown parties. In Northern Ireland, DUP minister ordered officials to stop border check at the Irish Sea, against the Northern Ireland Protocol, agreed between UK and EU, in their post-Brexit deal. As per Politico, the decision was blocked by Belfast High Court. [1]

Market Movements

The US Dollar rallied on Friday, trying to avert weekly losses against the JPY. However, EUR/USD was moving towards potentially its best week since March 2020, while GBP, AUD, NZD were also on track for profits against the greenback.

US equities had another volatile week as they digested monetary tightening prospects, geopolitical jitters and earnings results, but were on course for gains.

USOIL extended its advance into the seventh straight week and the highest level since September 2014, while XAU/USD was on track for a profitable week.

Corporate Activity

This week we got many interesting quarterly results that caused big moves. One of those was Meta, as its report disappointed markets and cause the stock to collapse.

More high profile companies though were in the spotlight, such as Amazon, Ford and others. Read more here.

Week Ahead (GMT)

During the upcoming week, markets will be looking forward to CPI Inflation update from the US (Thursday), which had surged to 7% year-over-year in December. Other than that, UK's Q4 GDP stand out on Friday.

Mainland China stock markets will return to action, while the one of New Zealand will be closed on Monday and markets in Japan will be out on Friday.

On the earnings front, we expect some heavyweights, such as Disney, Coca-Cola, Twitter, Uber and Lyft.

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 03 Jul 2022 https://www.politico.eu/article/belfast-court-blocks-dup-bid-to-stop-brexit-checks-at-northern-irish-ports/

Disclosure

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}