The trading week from January 28 will be determined by the following important events: the situation with Brexit and the state of affairs in the United States. The revolution in Venezuela will have an impact in perspective.
The dollar is likely to be under pressure on the background of the fact that the euro, pound and other major currencies may receive support as a result of the EU decision to extend the UK’s withdrawal from the EU.
This option has already been announced by several politicians: the German and Austrian Chancellors – Angela Merkel and Sebastian Kurtz, Brexit negotiator Michelle Barnier. The exit time will be transferred from March to May, subject to a clear and definite plan from the English Parliament.
Last week, his deputies took upon themselves the “Brexit burden”, removing Tereza May’s government from making decisions. The proposals of the factions will be submitted to the vote on January 29, various options are being considered, including the holding of a repeated national plebiscite, which does not exclude the return of the UK to the EU. Any decision is a positive factor for the pound because of clarifying the issue of “divorce from the European Union”.
The US dollar is in a different situation: due to the pursuit of Huawei and the requirement to monitor the observance of intellectual property rights of American companies in China, the arrival in Washington of a delegation from China on January 29-30 is no longer considered as positive news.
In addition, the fact that the White House’s request to the FBI and the CIA was leaked to the press, departments are asking to calculate the consequences of extending the shatdaun until April. The only thing that can level the negative is the adoption of a three-week budget. A compromise was proposed by Trump at the end of the week, in exchange for the consent of Congress to advance the construction of the border wall.
Oil traders should pay attention to the situation in Venezuela – the overthrow of Maduro can have long-term consequences, the country can quickly increase oil exports to 3 million barrels and review the terms of cooperation with OPEC.
From the number of publications of macroeconomic indicators, the strongest impact on currency fluctuations will be: the FOMC meeting on the level of the Fed rate, data on employment changes in the US (NFP), information on inflation in the Eurozone and the state of industrial production of China.