BOE in focus today but likely to be a non-event
The dollar is keeping steadier once again on the new day with EUR/USD still keeping above 1.2000 for now as sellers continue to knock on the door of the key level.
The pound is dragged a little lower as there are complications arising with the NI protocol with the UK calling for the grace period for trade barriers to be extended to 2023.
Elsewhere, gold and silver remain in retreat with the former breaking below key support levels now and likely taking aim at $1,800. The latter is also testing its 200-hour moving average once again near $26.45 - the level which held off the decline earlier in the week.
US stocks had a back and forth session yesterday but ended up near flat levels at the close, with the market continuing to mull over stimulus talks. S&P 500 futures are seen down slightly by 0.2% as risk appetite eases a little on the week itself.
Looking ahead, economic data will continue to stay as a sideshow in Europe as the focus turns towards the BOE today. However, Bailey & co. are likely to not offer anything new, so expect the market to keep the status quo and focus on risk ahead of US trading.
0830 GMT - Germany January construction PMI
Prior release can be found here. German construction activity was more subdued towards the end of last year and while the downturn has been easing, similar conditions are still anticipated as we get into the new year.
0930 GMT - UK January construction PMI
Prior release can be found here. UK construction activity has been holding up in the past few months but amid the latest lockdown measures, we might see construction output suffer to start the new year. A minor data point.
1000 GMT - Eurozone December retail sales data
Prior release can be found here. The major dip in German retail sales could set out a downside surprise to the report today, so that is something to take note. That said, this pertains to Q4 data and we already got a glimpse of overall economic output - which pointed to a contraction in any case - so the data here means little.
1200 GMT - BOE announces February monetary policy meeting decision
The December decision can be found here. The key debate will center around negative rates but expect the BOE to keep mum on that and maintain a similar stance as they have been in recent months. While it may be unlikely to see the BOE pursue that as the vaccine rollout is progressing, they certainly will not shut the door to it just in case. Do be reminded that Bailey alluded to the challenges in negative rates last month and labelling it a "controversial" issue within central bank discussions itself. That said, we will be getting an update this week on the BOE's review on how negative rates might play out in practice, so do look out for that. But if anything else, this is likely to be more of a non-event.
1230 GMT - US January Challenger job cuts, layoffs
Prior release can be found here. A reminder that it is NFP week in the market. The data provides information on the number of announced corporate layoffs by industry and region and acts as a general labour market indicator.
That's all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.
