Home Forex Weekly Outlook January 16-20 2012
Majors, US Dollar Forecast

Forex Weekly Outlook January 16-20 2012

The dollar made an impressing comeback at the end of a very eventful week. Will this continue? German ZEW Economic Sentiment, a rate decision in Canada, employment data in Australia and US housing figures are the highlights of this week. Here is an outlook on the main events in the week ahead.

Last week, the European Central Bank President Mario Draghi communicated calm and satisfaction with the central bank’s LTRO  program saying it has successfully combated credit erosion. That move only provided temporary calm to the markets, until the massive downgrade by S&P for euro-zone countries and the collapse of talks between Greece and the banks. Also US data is beginning to worsen.

Let’s start

  1. Euro-Zone German ZEW Economic Sentiment: Tuesday, 10:00. German economic sentiment rebounded from its lowest level since November 2008 rising by 1.4 points to -53.8 in December. Economists predicted a further drop of 0.6 points to -55.8. The EU summit decisions may have contributed to improve this reading. Another improvement to -49.1is expected now.
  2. Canadian rate decision: Tuesday, 14:00. The Bank of Canada maintained its benchmark interest rate at 1% in December due to an upbeat position on Canadian and US market conditions. The BOE members agreed that the EU economic crisis does bare a downside risk on world markets but were rather confident about their current financial strength. No clues were given about possible future rate cuts. No change in rates is predicted.
  3. UK unemployment claims: Wednesday, 9:30. The number of people claiming unemployment benefits in theU.K. increased by 3,000 in November well below the 16,000 increase predicted, while the unemployment rate remained elevated at 8.3%. October reading showed a rise of 2,500 new claims. An increase of 6,300 clims is expected now.
  4. US PPI: Wednesday, 13:30. Producer price index  for finished goods rise by 0.3% November amid a sharp increase in food prices while the  Producer Price index excluding food and energy  increased by 0.1%.  A climb of 0.2% is forecasted.
  5.  US TIC Long-Term Purchases: Wednesday, 14:00. US net foreign purchases of long-term securities dropped sharply to USD4.8 billion in October from USD 68.3 billion in September after China sold USD14.2 billion in U.S. Treasuries in October and the UK sold USD13.2 billion. A rise to 27.3 billion in foreign purchases is predicted now.
  6. Australian employment data: Thursday, 0:30. The Australian job market has contracted by 6,300 positions in November following a revised reading of 16,800 job gain in October. This reading was well below the 10,300 addition expected by analysts. In the meantime unemployment rate increased from 5.2% in October to 5.3% in November. A rise of 10,300 new jobs is expected and Unemployment rate is predicted to remain 5.3%.
  7. US Building Permits: Thursday, 13:30. Residential construction permits surged to an annual rate of685,000 in November, the highest rate in almost two years, amid low mortgage rates and a surge in apartment construction. The reading was well above predictions of 630,000 and may help boost the housing market sector. Building permits are expected to remain around 630,000 units.
  8. US inflation rate: Thursday, 13:30. The cost of living in theU.S. didn’t change in November after dropping 0.1% in October while economists predicted 0.1% gain. Corporations are reluctant to raise prices in fear consumers will reduce their purchasing activity causing inflation to moderate. Meantime, Core prices, excluding food and energy, increased by 0.2% while 0.1% gain was predicted.
  9. US Unemployment Claims: Thursday, 13:30. The number of people filing initial claims for unemployment benefits in theU.S. increased sharply last week reaching 399,000 from375,000 in the prior week. This reading was contrary to analysts predictions for a drop to 372,000 suggesting a relapse   in the recent growth trend in theUS job market.392K
  10. US Philly Fed Manufacturing Index: Thursday, 15:00. US Manufacturing sector expanded in December reaching 10.3 from3.6 in November. The survey revealed a rise in new orders as well as a small increase in prices of finished goods.  Analysis expected a smaller rise to 5.1. Another rise to 11.2 is predicted now.
  11. US Existing Home Sales: Friday, 15:00. Sales of existing homes increased 4.0% in November to 4.42 million-units after a revised 4.25 million units in October however the increase was less than the 5.04 million predicted by analysts. The building market is expected to further recover in the coming months. This time existing home sales is expected to increase to 4.69 million.

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

*All times are GMT.

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Anat Dror

Anat Dror

Anat Dror Senior Writer I conceptualize, design and create multi-lingual websites. Apart from the technical work, my projects usually consist of writing content for these sites in English, French and Hebrew. In the past, I have built, managed and marketed an e-learning center for language studies, including moderating a live community of students. I've also worked as a community organizer