Week Ahead – Earnings season in focus

Optimism remains despite Covid-19 surge

Earnings season is under way and will become an increasing focus in the coming weeks. New variants of Covid-19 are causing major surges across many countries which is forcing more severe and extended restrictions. Economies are coping well under the circumstances but will come under much more strain in the months ahead.

Risk appetite may be guided by earnings

ECB to remain on hold

China data kicks off the week



The US is still seeing disturbing news on the Covid front and the economy is starting to show further signs of weakness from the third coronavirus wave.  Too many parts of the country are low on ICU beds and concerns are that the slow vaccine rollout will mean lockdown efforts may intensify in the coming weeks.  

The Markit flash PMI readings are expected to show softness in both the manufacturing and service sectors.  Initial jobless claims are clearly trending higher and could top a million this week.  The housing market will remain the bright spot of the economy but both housing starts and existing home sales will show some seasonality weakness.  

Risk appetite may also get some strong cues from this earnings season.  Corporate America got a pass last year, but companies may be punished for failing to provide some guidance.  Big earnings results will come from Netflix, Intel, Goldman, BofA, Alcoa, and IBM.    

US Politics

Joe Biden becomes the 46th President of the United States, and Kamala Harris is sworn in as vice president.  Biden outlined a $1.9 trillion proposal for COVID relief package that he will try to push quickly through Congress.  Biden wants to get his cabinet quickly approved by the Senate, but some time will need to be dedicated to the impeachment trial of former-President Trump.    


The EU is facing stricter lockdowns as the virus continues to rapidly spread across many countries. New variants that have accelerated the spread elsewhere are likely to exacerbate the problem which will likely lead to restrictions being tightened and prolonged. 

While Covid-19 represents a significant threat to the economy in the first quarter, the ECB is unlikely to act, especially next week, having announced a raft of stimulus measures last month. This could make it a slightly low-key event, although investors will be looking for hints about what’s to come in the months ahead, given the threat of the new strains. Expect the usual ready and willing rhetoric.


The economy coped much better with the November lockdown than it did in April/May last year and compared to expectations. The current lockdown is more strict again so will likely take a heavier toll but with vaccines rapidly being rolled out, restrictions are expected to ease significantly early in the second quarter which should support the recovery.

Next week brings retail sales and PMI data later in the week, with the highlight probably being BoE Governor Andrew Bailey’s appearance on Thursday. Bailey recent hinted that negative rates are being discussed but not on the horizon.


The lira remains relatively stable against the US dollar this month after making up plenty of lost ground since the middle of November. High inflation remains a problem for Turkey but the central bank has shown a willingness under new leadership to raise rates in order to fight it. They may need to do so again should inflation remain stubbornly high.


Important data week with GDP, Industrial Production, Retail Sales and Fixed Asset Investment all released on Monday. GDP should accelerate to 6.0% and retail sales to 5.5%. If GDP falls short China equities could suffer a sharp downward reversal.

China 1 and 5-year Loan Prime Rates decisions on Wednesday. They will be unchanged and any change would be a huge shock.

The PBOC is showing signs that it is becoming less tolerant of Yuan appreciation, based on this week’s CNY fixes. A US Dollar rally due to higher US yields could see a major squeeze of long CNY, long Asian currency positions continue into early February.


No data and no market impact news/politics next week. Public holiday Tuesday will mute activity..

New Zealand 

Inflation data Friday expected to fall. Only a rise above 1.50% would impact the Kiwi or local stocks negatively. Currency may correct lower if US yields continue rising next week.


Covid-19 fears have receded as an outbreak in NSW brought under control and Brisbane and Victoria State report no new cases.

Data highlight is employment on Thursday. The rate of growth is expected to slow to 50k from 85k. Volatile data with only a fall into negative territory scaring the AUD and Australian equities.

AUD/USD has broken its uptrend and further hikes in the US 10-year next week could see AUD/USD long positioning get severely squeezed.  


Japan mulls expanding Covid-19 state of emergency nationally. Equities have shrugged this off as Japan’s definition of state of emergency is very much a lock-down light. We do not expect that sentiment to change markedly next week. 

Heavy data week featuring Industrial Production, PMI’s and Balance of Trade. All are expected to show a slowdown as the knock-on effects of US and European market restrictions seep into the data. Low market impact. Bank of Japan rate decision Thursday expected to be unchanged at -0.10% with no change to QE. A change to yield curve control would see Yen rally but is a miniscule probability. 

A further move higher in the US 10-year next week could see a test of long-term resistance at 104.50 tested.

Key Economic Events

Saturday, January 16th

– German Chancellor Angela Merkel’s center-right party chooses a new leader

Sunday, January 17th

Economic Data

China Q4 GDP Q/Q: 2.6% estimate v 2.7% prior; Y/Y: 6.2% estimate v 4.9% prior; Dec Industrial Production Y/Y: 6.9% estimate v 7.0% prior; Retail Sales Y/Y: 5.5% estimate v 5.0% prior

UK Rightmove house prices

Monday, January 18th

– US equity and bond markets are closed for the Martin Luther King Jr. holiday.

– Euro-area finance ministers meet and try to reach a consensus on how to implementation of the recovery fund.  The next day all the EU ministers meet.

– BOE Governor Bailey speaks

Economic Data

Canada housing starts

Singapore non-oil domestic exports, electronic exports

Japan industrial production, capacity utilization

Tuesday, January 19th

– U.S. President, Donald Trump is expected to leave for Mar-a-Lago and deliver a wrath of pardons.

– Earnings results from Bank of America and Goldman Sachs happen before the bell and Netflix gives their results after the close.

– Senate hearings for Biden’s cabinet nominees.  Former Fed Chair Janet Yellen’s should easily get confirmed as Treasury Secretary

– BOE Chief Economist Andy Haldane speaks

– The European Commission discuss vaccine distribution strategy

– Atlantic Council Global Energy Forum is held virtually from January 19-22nd.  OPEC’s secretary-general, UAE’s energy minister, Aramco’s CTO, and Adnoc CEO to speak.

Economic Data

US TIC flows

Canada manufacturing sales

Germany January ZEW expectations survey: 56.0 estimate v 55.0 prior

Wednesday, January 20th

– Inauguration Day: Joe Biden becomes the 46th president of the US, and Kamala Harris is sworn in as vice president.

– BOE Governor Bailey speaks alongside Financial Stability Director 

– The European Commission outlines plans to boost the international role of the euro.

– The Standing Committee of China’s National People’s Congress meets.

Economic Data and Events

Canada rate decision: Expected to keep Interest Rate at 0.25%.

Australia Westpac consumer confidence

China rate decision: Expected to keep 1-year Loan Prime Rate at 3.85% and the 5-year LPR at 4.65%


South Africa CPI

Canada CPI

Thursday, January 21st

– European Central Bank is expected to leave key rates unchanged.  The virus situation has deteriorated, and they may consider increasing their monthly PEPP buying.

– Bank of Japan is expected to keep Policy Balance Rate at -0.1% and the 10-year yield target at 0.%.  Governor Haruhiko Kuroda will address the enhanced lockdowns and impact on the economy and possibly provide some insights on the review of its framework which is due in March. 

– South Africa Central Bank (SARB) expected to keep Interest Rate unchanged at 3.50%

– EU leaders’ virtual summit on COVID, economic impact, and vaccines.

Economic Data/Events

US initial jobless claims, Building Permits, Housing Starts, Philly Fed Business Outlook

Mexico unemployment rate

Japan trade, machine tool orders, CPI and GDP forecasts

Australia unemployment

South Africa retail sales

Norway rate decision: Expected to keep Deposit Rates unchanged at 0.00%

Turkey rate decision: Expected to keep One-Week Repo Rate unchanged at 17.00%

French manufacturing confidence

Friday, January 22nd

– Results of the ECB Survey of Professional Forecasters

Economic Data

US Jan Prelim Markit Manufacturing PMI: 56.5 estimate v 57.1 prior, Services PMI: 54.0 estimate v 54.8 prior, Dec Existing Home Sales: 6.55M estimate v 6.69 prior

EIA crude oil inventory report

US Baker Hughes rig count

Canada retail sales

New Zealand Manufacturing PMI, CPI

Australia Markit PMIs, retail sales

Japan CPI and PMIs

Euro-zone Jan Prelim Markit Manufacturing PMI: 54.9 estimate v 55.2 prior, Services PMI: 45.5 estimate v 46.4 prior

UK Markit PMIs, retail sales, public sector net borrowing

Sovereign Rating Update

– Czech Republic (Fitch)

– Greece (Fitch)

– EFSF (Fitch & DBRS)

– ESM (Fitch & DBRS)

– Turkey (S&P)

– Cyprus (Moody’s)

– Netherlands (DBRS)

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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