Busy Week for US Big Companies

Last week US inflation data showed that the CPI continues to print multidecade highs. However, markets initially shrugged off the release as the year-on-year figure matched consensus.

Despite the US being closed on Monday in observance of Martin Luther King Day, all indices are expected to fluctuate for weeks as a war on the back of the official earnings season officially begins on Tuesday.

Analysts expect big US companies to report around 22 percent gains in Q4 of 2021, with energy, industrials, and materials leading the game, utilities and financials lagging. The estimate is nearly half of Q3’s results, where the average earnings growth came out at about 40 percent.

With nine out of eleven sectors expected to report, the SPX is poised to move.

If big firms report growth on a quarter-on-quarter basis but not year-on-year, the index could fall to 4581, and even 4551 support.

If, however, QoQ figures see even a marginal uptick or at least fall no more than the estimated average of 4.6 percent, the SPX could rise to 4727 and perhaps even register a fresh all-time high once it clears the 4787.

UK Reports, Pound Adapts

Inflation was last week’s theme in the US; this week, it passes to the UK mid-week. However, before the inflation figures get released, the British report their latest employment numbers on Tuesday, and consumer confidence and retail sales on Friday.

As if the release of economic data is not enough to add to fluctuations, Johnson is expected to lose further support on the back of polling data even if Sue Gray’s investigation report favors him as his popularity keeps plummeting.

There are several economic and political events for the week ahead in the UK, with the pound likely to start feeling the impact of political uncertainty.

If the UK’s economy shows weakness in the data, the cable could slide lower towards 1.3614 and 1.3526.

If at least employment data reveal some strength, the pound will be set to a good start on Tuesday, and the Common’s session might have less of an impact on sterling.

In either case, it seems that only positive data and a worse than expected rise in inflation might offer a helping hand on GBPUSD, sending it back to 1.3750 and less likely 1.38.

Canadian CPI to Set Tone for 26^th Meeting

It’s not only the UK releasing CPI and retail data but also Canada. There is no impact from politics to affect the loonie immediately; however, the figures are expected to have been impacted negatively by the latest measures against covid.

Although markets often price in such expectations, in the case of the Canadian dollar, traders have been mainly bid amidst risk appetite, following oil and other commodities along with the latest employment data in Canada.

While inflation runs hot at 4.7 percent, pressure mounts on BoC to hike to tame inflation. Despite BoC following Fed, most economists have pumped up their call to January’s meeting on the 26^th.

If inflation comes at higher than the expected 4.7% figure, it will probably support prices a bit further, and USDCAD could continue to descent toward 1.2430 once bulls clear the 1.25 hurdle.

Even on all data front, poor figures might be ignored as markets might continue to price in a January hike. However, it will most likely depend on the divergence in the CPI, should there be one.

However, if risk appetites reverse, the pair could accelerate towards 1.26 and even 1.2625.

Australian Jobs on the Spotlight

This week, a round of prints is expected to impact the Aussie, with consumer and job data taking center stage. In Australia’s case, though, the RBA is highly unlikely to change policy rhetoric, which means pricing in the events is less likely. This leaves traders with good intraday opportunities based on the direct impact of the above data on the prices of the Australian dollar.

On Wednesday, Australia will report consumer sentiment. If the data continue to show that the hardest-hit states post significant depreciation, and without the RBA changing its somewhat dovish stance, Aussie could slide towards 0.7121 unless the jobs market improves.

If it does not, Aussie could plummet lower down towards 0.7060 once the 71 cents get cleared out.

Only if consumer confidence and jobs data improve can we see AUDUSD start appreciating towards 0.7273, holding the 72 cents supports longer. During the week, there are fewer chances to move beyond the previous swing high at 0.7313.

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