5 Things to Watch Next Week: The Fed, Trump, US Economy, Ethereum, Qatar

1.            The Fed Decision on Wednesday

The Federal Reserve is widely expected to raise interest rates once again, despite the slight weakness in recent economic numbers. The rate will likely be raised by one notch to 1.25%, which is still a very low level historically.  The more important question about Wednesday’s meeting is the language of the monetary statement, as rate expectations declined recently, amid the troubles of Donald Trump, and the weakening economic momentum. The Japanese and the Swiss central bank will also hold their scheduled meetings during the week, and it wouldn’t be a big surprise if the BOJ decided to take some steps against the recently strengthening Yen.

2.           Will Donald Trump’s position deteriorate further?

The new POTUS has been under attack since election regarding several issues, but the case involving ex-FBI Director Comey seems to be the most damaging one so far, especially after a round of controversial hearings, where serious accusations have been stated against Trump, which could lead to real problems for him. His position in the Republican Party is the key to the situation, which, so far, hasn’t reached critical levels, although we don’t know what is going on under the surface. A leadership crisis could cause a huge wave of uncertainty, and the nervousness is already present in the market.

3.           Temporary slowdown or structural problems in the US?

Retail Sales have been consistently missing expectations in the in the US, and thanks to that and with several other measures, the economic surprise index hit yet another 15-month low, which warns of something fishy. The Federal Reserve dismissed the weakness as transitory so far, but if the trend continues, the central bank will surely step on the breaks in its tightening cycle. While some assets are already pricing in this (gold, Treasuries, Dollar) that would still cause a seismic shift in global markets, especially currencies.

4.           Cryptocurrencies on new highs again, will the rally last?

Bitcoin and Ethereum continued their march to fresh all-time highs this week, and Ethereum produced a massive rally during the weekend, propelling its price to $350 and its market capitalization above $30 billion. The long-term picture is looking mixed for the majors of the crypto market, and it might be time for other coins to shine. Dash, Ethereum Classic, and our pick Litecoin are rising so far today, and Stratis is also showing strength after a deep correction. The total market cap of the coins jumped by another $10 billion to $110 billion (as usual…) and the segment still seems unstoppable, even following the scary plunge two weeks ago.

Ethereum/USD 4-Hour Chart

5.           What on earth will happen with Qatar?

The Qatar crisis changed the political landscape of the Middle-East overnight, even though the frontlines between the regional powers were pretty clear already. Under the surface, there is a crucial struggle for power between Saudi Arabia, Iran, and Turkey the three most influential countries of the region, with the price of oil playing a key part in the equation. It’s hard to see what the real goal of the diplomatic blockade is, but the next steps could be vital, especially in the case of further escalation. Saudi Arabia and Iran are the cornerstones of the OPEC-deal regarding an extended production cut by the cartel, and we have seen major swings in the price of the commodity, as investors weighed the severity of the situation.

Key Economic Releases of Next Week

Day Country Release Expected Previous
Monday JAPAN PPI Index 2.10%
Monday US Federal Budget Balance 182.4 bill
Tuesday AUSTRALIA NAB Business Confidence 13
Tuesday UK CPI Index 2.7% 2.7%
Tuesday GERMANY Zew Economic Sentimetn 21.8 20.6
Tuesday US PPI Index 0.1% 0.5%
Wednesday CHINA Industrial Production -0.002 -0.001
Wednesday UK Average Earnings 2.4% 2.4%
Wednesday UK Unemployment Rate 6.4% 6.5%
Wednesday US CPI Index 0.3% 0.2%
Wednesday US Core Retail Sales 0.2% 0.3%
Wednesday US Crude Oil Inventories 3.3 mill
Wednesday US Fed Interest Rate Decision 1.25% 1%
Wednesday US Fed Monetary Statement
Thursday AUSTRALIA Employment Change 10,300 37,400
Thursday AUSTRALIA Unemployment Rate 5.7% 5.7%
Thursday SWITZERLAND SNB Monetary Statement
Thursday UK BOE Monetary Statement

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Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.