The U.S. dollar and oil will remain in focus
With everyone paying attention to the continuing terrorist attack in France, markets are slightly on edge, but remain more focused on the main drivers of volatility and uncertainty in the last few weeks – the rise and rise of the U.S. dollar and the continued drop of oil.
We’ve just seen the jobs numbers from the U.S. and with 252 000 nonfarm jobs created in December, above the forecasts of 240 000, they will give a boost to the Dow Jones and S&P. European indices will most likely follow suit.
Monday will be a bank holiday for Japan, so the yen and NIKKEI will have a delayed reaction to today’s data, although the former might see some movement driven by traders outside the country. It will be a day of limited economic announcements, but with the increased volatility of late, any little trigger might set off the markets in either direction.
Tuesday will see the announcement of Britain’s CPI numbers, shedding more light on the continued recovery of the economy. The announcement usually prompts more comments about the country’s membership in the EU and the combination of the two will sway the pound.
Wednesday sees an announcement from the European Court of Justice regarding the legality of the European Stability Mechanism – or simply put as the way European countries, central and private banks combine and exchange their resources to (try and) keep financial stability. Opponents of the EU and what they call the limiting of independence, challenged the mechanism as being illegal according to the constitutions of various states. The court is expected to reject these claims and so provide a much needed boost for the common currency. The announcement itself doesn’t have a set time, so it might come at any point during the day.
The last two days of the coming week will have more of the usual inflation and unemployment data from the U.S., but in the early hours of Thursday we will get the employment data from Australia, which might prompt another attach on the 0.82 level (if it hasn’t been breached already by then).
And here are our weekend reads with some longer articles on what grabbed our attention this week:
With the continued drop of the euro, the ECB is poised to act, but when exactly and with how much force. (Economist – registration required)
Many predicted the drop in the common currency, but the most precise prognosis came from ING Groep NV – here is what they think will happen next. (Bloomberg)
Last week saw one of the most notable drops in search engine usage for Google (Business Insider). This great analysis, coupled with straightforward and quite lovely charts analyses if this is a sign of things to come. (Stratechery)
The Consumer Electronics Show in Las Vegas is still on, but we’ve already been hugely impressed by the driverless cars and the continued advance in the “Internet of Things”. The list at the end of the article is also the best recap of all the showcased technologies. (The Verge)
Finally, we turn to a technological breakthrough that is probably on par with the Deep Blue victory over Gary Kasparov. Scientists from the University of Alberta claim to have created a “perfect poker program” and you can test your skills against it here. The implications of solving a game that always has inherent uncertainty can be a game-changer for whole industries and areas of life. (BBC)