Category: US Dollar Forecast

Forex Weekly Outlook Jan. 26-30



The US dollar was in full control and the euro was the big loser in an exciting week of trading. There is not much time to rest as a new week begins with the results of the Greek Elections and is followed by GDP data from the US, the UK and Canada and the Fed decision among other events. These are the most important economic releases for this week. Follow along as we explore these Forex market movers.

The central event was Draghi’s announcement of an extensive bond-buying program which will insert more than one trillion euros into the system. The €60 per month pace and the planned size exceeded expectations and so did the option to extend the program depending on inflation expectations. Most of the buying will be made by the national central banks rather than the ECB. The markets initially paid attention to the decentralization but eventually the euro was sold off quite sharply, even trading below 1.12. Elsewhere, Chinese GDP slightly beat expectations but this helped the Aussie only temporarily, before AUD/USD lost the 0.80 line. The Bank of Canada surprised with a rate cut that hurt the loonie and weak inflation in New Zealand hurt the kiwi. GBP/USD fell below 1.50, partly because the minutes revealed a unanimous decision not to raise rates. Will this dollar domination continue?

Updates:
  1. Greek Parliamentary Election: Sunday. The national elections this week will determine whether Prime Minister Antonis Samaras will maintain his position or be defeated by Alexis Tsipras from Syriza party. Samaras said he can reach an agreement with Greece’s creditors by the end of February, while Tsipras said he can get an agreement by this summer keeping Greece within the euro area. Greece will not receive the next bailout money of 7.2 billion euros unless a review of the country’s progress in meeting the terms of its bailout is completed by Feb. 28.  Recent polls show a victory for SYRIZA, but it is unclear if they can command an absolute majority in parliament. A win for the opposition is slightly euro-negative while a victory for incumbent New Democracy would boost the common currency.
  2. German Ifo Business Climate: Monday, 9:00. German business confidence increased 0.8 points in December, reaching 105.5, broadly within market expectations. Falling oil prices and the weaker euro boosted German economy. Economic data showed improvements in the manufacturing and wholesaling sectors despite downturn trend in sales to Russia and sluggish reforms in France and Italy. Business sentiment is expected to reach 106.7 this time.
  3. UK GDP data: Tuesday, 9:30. U.K. economic growth weakened in the third quarter, amid sluggish economic activity in the euro-area. Gross domestic product increased 0.7% in the three months through September, following 0.9% rise in the second quarter. The reading was in line with market forecast. On an annualized basis, the U.K. economy expanded 2.8% in the third quarter. Worrying signs of renewed stagnation in the euro zone may have a negative effect on UK’s. UK growth is predicted to be 0.6% in the fourth quarter of 2014.
  4. US Durable Goods Orders: Tuesday, 13:30. Durables orders plunged 0.7% in November after gaining 0.3% in October, while analysts expected a 3.0% jump. Likewise, core orders dropped 0.4% in November after contracting 1.0% in the prior month. Analysts predicted a 1.2% rise. Transportation declined 1.2% a 3.3% jump in October. The rise in autos and non defense aircraft was overshadowed by a sharp drop in defense aircraft orders. Both Durable orders and Core orders are expected to gain 0.6%.
  5. US CB Consumer Confidence: Tuesday, 15:00.  American consumers were more positive in December amid strong economic data releases. Consumer sentiment climbed to 92.6 in December from a revised 91 in the previous month. 17.1% of responders noted a rise in job availability from 16.2% in November. 19.6% claimed business conditions were worse compared to 21.8 in November. The rise in confidence goes hand in hand with GDP growth and the constant improvement in the job market. A further increase to 95.7 is expected now.
  6. US New Home Sales: Tuesday, 15:00. Sales of new U.S. homes contracted 1.6% in November to a seasonally adjusted annual rate of 438,000 units, indicating the housing sector still hasn’t benefited from the recent improvements in the job market. The reading was worse than the 461,000 rate forecast by analysts and lower than October’s downwardly revised rate of 445,000. New-home sales remain far below the annual rate of 700,000 seen during the 1990s, as many Americans lack solid credit records to enable obtaining mortgages. Sales of new U.S. homes is expected to reach 452,000 in December.
  7. US rate decision: Wednesday, 19:00. The Federal Reserve policy makers have repeatedly announced their intentions to raise rates during 2015. However the sharp plunge in consumer prices during December may detain such a move. Federal Reserve chair Janet Yellen, claimed that the sharp drop in oil prices was positive for the US economy boosting household spending, but other Fed policy makers prefer to see stronger inflation before voting to raise rates. The Fed’s focus is on core inflation to help assess underlying price pressures in the economy. Fed official said recently that mid-year would be an appropriate time to consider a rate rise. No change in rates is expected but every word in the statement will be analyzed. No press conference nor forecasts accompany this decision.
  8. NZ rate decision: Wednesday, 20:00. The Reserve Bank of New Zealand has maintained its Official Cash Rate at 3.5% in December in line with market forecast. The central bank estimates output will grow above capacity and inflation will reach the 2% target by the end of the forecast period, which will advance a 40 basis points rate hike by early 2017. Reserve Bank of New Zealand Governor Graeme Wheeler repeated his warnings about the overrated New Zealand dollar but noted that global financial market volatility had taken some pressure off the currency. While no change is expected, a rate cut cannot be ruled out after the surprising cut from the Bank of Canada.
  9. US Unemployment Claims: Thursday, 13:30. The number of Americans filing initial claims for unemployment benefits was higher than expected last week, indicating the holiday volatility sill continues. Jobless claims declined by 10,000 to 307,000, while expected to reach 301,000. Layoffs of holiday staffing make it difficult to assess the true state of the weekly jobs data. However, except for these temporary layoffs the US job market remains resilient at the beginning of 2015. The number of jobless claims is expected to reach 301,000 this week.
  10. Canadian GDP: Friday, 13:30. Canada’s economy expanded more than expected in October rising 0.3% following a 0.4% gain in the previous month. Analysts expected a small increase of 0.1%. However weak oil prices are forecasted to weaken growth in 2015 by contracting exports and investment. The BOC projects a yearly growth of 2.2% in 2015 from 2.5% growth in 2014. However exports to the US are expected to increase as the US economy strengthens. Canadian growth is expected to contract 0.1%.
  11. US GDP data: Friday, 13:30. The U.S. economy expanded 5% in the third quarter, indicating the US economy continues to improve and has no need for further QE. The final GDP release was stronger initial reads. Business investment and consumer spending dropped slightly from the second quarter, however, trade deficit contracted. Growth in four of the past five quarters reached 3.5% or above suggesting self- sustaining growth. Us economic growth in the fourth quarter  is expected to be 3.1%.

That’s it for the major events this week. Stay tuned for coverage on specific currencies

*All times are GMT.

The impact of the Swiss decision still impacts brokers. Here are reactions from 72 forex brokers.

In our latest podcast, we do an ECB QE rundown, SNBomb effect on brokers, surprise cut in Canada & Iranian oil:

Download it directly here

Subscribe on our iTunes page

Further reading:

Forex Weekly Outlook January 19-23

Forex Weekly Outlook January 19-23

The Swiss franc stormed back to the scene and was unexpectedly a huge winner in one of the more dramatic weeks in currencies and the forex industry. There is probably little time to rest as a busy week awaits: 3 rate decision with the ECB one taking center stage, as well as employment data from

Forex Weekly Outlook January 12-16

Forex Weekly Outlook January 12-16

The dollar had a mixed performance in the first full week of 2015. Inflation data in the UK and the US, US retail sales, the Philly Fed Manufacturing Index and Consumer sentiment are the main events on Forex calendar. Here is an outlook on the highlights of this week. The NFP report was better than expected showing

Forex Weekly Outlook January 5-9

Forex Weekly Outlook January 5-9

The dollar opened 2015 with a storm, especially against the beaten euro. And now, trading activity returns to full swing with: a buildup to the Non-Farm Payrolls, the FOMC meeting minutes and lots more. These are the main economic releases for this week. Let’s see, in detail, the market movers to impact Forex trading. Just

Forex Weekly Outlook Dec 29- Jan 2

Forex Weekly Outlook Dec 29- Jan 2

On the week of Christmas, the dollar managed to edge up against quite a few currencies. We end 2014 with US CB Consumer Confidence and Unemployment Claims and open 2015 with US ISM Manufacturing PMI. Join our weekly outlook with the main market movers to impact Forex trading. Happy 2015! Last week, the final revision

Forex Weekly Outlook December 22-26

Forex Weekly Outlook December 22-26

The US dollar enjoyed wide gains in the last full week before the holidays. Will the ride continue also on thin liquidity? GDP data from Canada and the US, US Durable Goods Orders, New Home Sales, and unemployment claims are the major topics in Forex calendar. heck out these events on our weekly outlook. Last week, Federal Reserve

Forex Weekly Outlook Dec.15-19

Forex Weekly Outlook Dec.15-19

The US dollar retraced some of the previous gains but managed to retrace the retracement as well. Japan’s Lower House Elections, UK inflation and employment data and the most important event: the last Fed decision for the year are the main highlights for this week. Follow along as we explore the Forex market movers. The US consumer

Forex Weekly Outlook Dec. 8-12

Forex Weekly Outlook Dec. 8-12

The US dollar had another excellent week, reaching new highs against many currencies. Can this continue or will we see a pause? Rate decisions in New Zealand and in Switzerland, US retail sales and consumer sentiment and the ECB’s TLTRO are among the major events for this week. Here is an outlook on the highlights

Forex Weekly Outlook December 1-5

Forex Weekly Outlook December 1-5

The euro emerged as the winner of an interesting week that closed the month of November. The first week of the last month is certainly busy. US ISM Manufacturing PMI, Rate decisions  in Australia, the UK and the Eurozone, Important employment events in Canada and the US including the important NFP release. These are Forex

Forex Weekly Outlook November 24-28

Forex Weekly Outlook November 24-28

The dollar strengthened quite nicely, with the exception of the loonie, as the US economy and the Fed remain firmly on track. Euro-zone inflation data, US, UK and Canadian GDP data, US Durable Goods Orders,  and housing data are the most important economic releases in the last week of the month. Here is an outlook on