The dollar is steady ahead of a busy week

The Federal Reserve

The Fed is expected to maintain its key interest rates at current levels. The Federal Reserve (Fed) Funds Rate target range is forecast to remain between 5.25% and 5.5% for a fourth consecutive meeting. Fed funds futures currently price in a 97.4% chance of no change, but there is a 59.7% chance that the Fed will cut by at least 25 basis points at its March meeting. The Fed hopes to navigate a soft landing for the US economy. At its December meeting, the Fed shared its latest views on US economic growth. finacial year (FY) gross domestic product (GDP) growth is seen at 1.4% in 2024; the unemployment rate is seen at an average of 4.1%.

The Bank of England

Then on Thursday, the Bank of England (BOE) was also seen staying put on rates. Governor Andrew Bailey and other top BOE members have been saying until recently that a rate cut would be premature. They also warned about the risks of strong wage growth. But recent data on headline inflation, wages, and economic growth came in weaker than expected, which suggests that the BoE could relax its line on borrowing costs.

The German economy

Some growth data is also on the cards on Tuesday. The German economy is expected to contract by 0.3% in Q4 Quarter on quarter (QoQ). The 0% growth from last quarter saves it from entering a technical recession. But this is a risk France and the eurozone are running. The French economy is forecast to stay flat in Q4. That is the latest forecast. On Friday, economists polled were anticipating a 0.1% fall. As for the eurozone, GDP is seen contracting by 1% in Q4 QoQ after a 0.1% contraction in Q3.

US job data

And there's US job data. A string of indicators was released throughout the week, culminating with non-farm payrolls on Friday. Starting tomorrow with job openings and labor turnover survey (JOLTs) job openings. These are forecast to come marginally lower than last month at 8.75 million for the month of December. This would be the fourth consecutive month of decline for this indicator, taking it to a level not seen since March 2021.

Then on Wednesday, the automatic data processing (ADP) survey. Private US businesses are anticipated to have hired 135,000 workers in January, fewer than the previous month. Initial jobless claims will be published as ever on Thursday, and then there's the big one to end the week: non-farm payrolls. Early expectations are for 173,000 job creations in January. Remember that December data was a stronger-than-forecast 216,000, the highest in three months? The unemployment rate is seen rising to 3.8% from 3.7%. And average hourly earnings are to rise by 0.3% month-over-month (MoM) and 4.1% year-over-year (YoY).

Ryanair

Ryanair trims its full-year profit forecast after some online travel agents, which Ryanair accused of adding illegitimate extra charges, stopped selling Ryanair flights last month. It now sees an after-tax profit of between €1.85 billion and €1.95 billion for the year to end in March. In November, Ryan Air had a forecast of €1.85 billion to €2.05 billion. That would still beat its previous record annual after-tax profit of €1.45 billion set in 2018. In Q3, Ryanair earned €15 million in the three months to the end of December, missing analysts' expectations of €49 million. Traffic in the period was up 7% to 41.4 million passengers; average fares were 13% higher than last year.

Philips

Philips announced this morning that it had reached an agreement with the US ates Food and Drug Administration (FDA) over the recall of ventilators. In June 2021, Philips had to recall breathing devices and ventilators used to treat sleep apnea because of the risks of toxicity. It was established that the foam used to reduce the noise of the device could degrade, become toxic, and carry potential cancer risks. The operation knocked down Philips share price as investors feared large litigation bills.

Philips has now agreed to a consent decree with the FDA. This decree will provide the group with a roadmap of defined actions, milestones, and deliverables to demonstrate compliance with regulatory requirements. Until the conditions are met, Philips will not be able to sell new respiratory care devices in the US. This also leads to a provision of €363 million in Q4. According to the group, the agreement will not change its earnings or free-cash flow expectations.

UK earnings reports

A few important UK earnings reports are due this week. On Tuesday, Diage is scheduled to publish its half-year report, followed on Wednesday by GSK's full-year earnings, and on Thursday by Shell Q4 earnings and BT trading updates for the third quarter.

US earnings season

This week will be arguably the most important of this US earnings season, with reports from the four largest US companies. On Tuesday, we have Pfizer, General Motors, Advanced Micro Devices, Microsoft, the newly formed world's largest company in terms of market capitalization, and Alphabet. Wednesday: Boeing and Qualcomm. Thursday: Apple, the second-largest company in the world; Peloton Interactive; Meta Platforms; and Amazon. The two oil giants, Chevron and Exxon Mobil, will conclude the week on Friday. All these are all-session stocks on the IG platform, which means you can trade them from 9 a.m. until 1 p.m., giving you the opportunity to make the most of all reports, pre- and post-session.

Oil

Oil prices trade near a two-month high as the market fears Middle East tensions could escalate. Oil prices surged on Friday on the news that an oil tanker was hit by a missile in the Red Sea. On Sunday, a US base in north-east Jordan suffered a drone attack, killing three and injuring 34 others. Note that last Friday, Baker Hughes total rig count increased to 621 last week from 620 the previous one. The number of active oil rigs rose by two to 499.