Market Focus: RBA Rate Statement, UK GDP, and Canadian Employment Data

　　

What happened in the market last week?

• The US Federal Reserve increased interest rates to 4.75%, citing a deflationary market environment.
• The NonFarm Payrolls report showed better-than-expected job growth and a decrease in the unemployment rate, which could lead the US Fed to take further action. The number of jobs rose from 260,000 to 517,000, and the unemployment rate went down from 3.5% to 3.4%.
• The Bank of England raised interest rates from 3.5% to 4% due to expectations of a short-lived recession in the UK.
• The European Central Bank (ECB) raised interest rates by 50bps to 3% to address the rising inflation in Europe. According to ECB President Christine Lagarde, further rate increases are expected.

Last Week Market Pair Changes

Last week saw high market volatility due to news from the US and central banks. The Fed rate decision had a significant impact on some major currencies, but better-than-expected US Jobs data resulted in a substantial drop for majors and gold by the end of the week.

• The USD Index rose by 1.08%.
• The EURUSD fell by 0.63%.
• The USDJPY rose by 1.23%.
• The GBPUSD was lower by 2.66%.
• The DJ30 ended the week at the same level as its open price, while the NAS100 rose by 3.41%. 
• Gold was unable to keep above the 1900 level and fell by 3.23% for this week.
• USOUSD (WTI) settled lower by 8.33 for the week, still affected by the strong USD and Russian oil supply.

(All data taken from MT4 VT Markets)

(Picture taken from forexfactory.com)

What to focus on this week?

Following a busy week in the US, this week will be more relaxed. The focus will shift to Australia, where the RBA will announce its monetary policy, and the UK, where Monetary Policy Hearings and GDP data will be released.

Here are some key events for this week:

7 February 2023 | RBA Rate Statement

The Reserve Bank of Australia (RBA) increased the cash rate by 25bps to 3.1% at its final meeting of 2022, marking the eighth straight rate hike.

Analysts expect RBA to raise 20bps to 3.3% this month.

10 February 2023 | UK Monthly Gross Domestic Product

The British economy grew 0.1% in November, down from October’s 0.5%.

For December 2022, analysts expect UK GDP to be lower by 0.1%.

10 February 2023 | Canada Employment Change

The Canadian economy created 104,000 jobs in December 2022, while the unemployment rate was at 5%, the lowest since the record-low of 4.9% in June and July, decreasing from 5.1% in the prior month.

Analysts expect another 15,000 jobs in January, much lower than in December 2022, while the unemployment rate will be higher at 5.2%.

10 February 2023 | US Prelim University of Michigan Consumer Sentiment

The University of Michigan consumer sentiment for the US was revised higher to 64.9 in January of 2023, the highest since April 2022, from a preliminary of 64.6.

Analysts expect the data to be around 65 this month.

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