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 before 2014 ended,  US jobless claims  disappointed with a 17,000 rise in the number of new claims, reaching 298,000. However,  Consumer confidence, released earlier, rebounded to 92.6 following 91 points in November, indicating consumers are more confident at year-end than they were at the beginning of the year. The ISM manufacturing PMI was weak, but we had a silver lining from the employment component. In the euro-zone, drama came from Greece, where the country is preparing for elections amid uncertainty about the bailout and signs of QE are mounting. This sent EUR/USD to 1.20. The dollar gained against other currencies and stood out against the C$, which also suffered another fall in oil prices.  Let’s start:

1. US ISM Non-Manufacturing PMI: Tuesday. 15:00. Non-manufacturing Purchasing Managers Index rebounded in November after two straight months of declines. The Index increased to 59.3 beating forecasts of 57.5. 14 industries out of the 18 surveyed reported expansion. Non-manufacturing PMI is expected to reach 58.2 in December.
2. US ADP Non-Farm Payrolls: Wednesday, 13:15. The U.S. private sector added 208,000 workers in November following 230,000 jobs gain in the previous month, indicating the slowdown in global economy does not impact US domestic activity. The ongoing improvement in the labor market leads to faster wage growth. A Labor Department report showed compensation per hour increased 1.3% in the third quarter rather than the 2.3% reported in the previous month, and declined 0.9% instead of the expected 2.3% rise. ADP job gain is expected to reach 227,000 in December.
3. US Trade Balance: Wednesday, 13:30.  The U.S. trade deficit contracted less than expected in October reaching $43.03 billion. Lower  crude  oil  prices had limited impact. Imports jumped 0.9%, reaching $241 billion, while exports increased 1.2% to $197.5 billion, indicating the economy  was is resistant to the slowdown in global demand. Economists forecast a deficit of $41.3 billion.  Exports to the European Union increased 8.5 percent, while  China  saw a 36 percent jump in the value of goods it imported from the United States. Exports to  Japan  rose 4.0 percent, while those to Canada and  Mexico  – the main U.S. trading partners – reached record highs.  Sustained dollar strength, however, is expected to undercut export growth in the months ahead.  Imports from  China  hit an all-time high, leaving the politically sensitive trade gap at $32.6 billion. U.S. trade deficit  is predicted to narrow to 42.3.
4. US FOMC Meeting Minutes: Wednesday, 19:00. In the December FOMC meeting, the Fed removed the “considerable time” message regarding rates, but balanced it with its observations and a more moderate “dot chart”. The dollar then got a boost by Yellen, that sounded optimistic about the economy, talked about raising rates in 2015 and did not fear the fall in oil prices. We will now see some of the internal debate around that meeting. Will we see a dovish minutes to counter the bullish tone? Or could it just serve as another dollar driver?
5. UK rate decision: Thursday, 12:00. The  Bank of England  kept its key interest rate at a record low of 0.50% amid weak inflation threatening economic growth. Policy makers also voted to maintain cash stimulus at £375 billion. Britain’s 12-month Consumer Price Index (CPI) rate increased to 1.3% in October from a five-year low of 1.2 percent in September, but remained far below the BoE’s government goal of 2.0%. No change in rates is expected this time.
6. US Unemployment Claims: Thursday, 13:30. The number of Americans filings initial claims for unemployment benefits in the U.S. increased last week by 17,000 to a seasonally adjusted 298,000, beating market forecast. This was the highest figure since November 22 topping analysts’ predictions for a 287,000 reading. The four-week moving average, a less volatile measure, climbed to 290,750. The number of claims is expected to reach 291,000 this week.
7. Canadian employment data: Friday, 13:30.  Canada’s job market had a temporary setback in November, contracting 10,700 jobs which nudged the unemployment rate slightly to 6.6%. However, despite the disappointing release, the general trend is positive showing a 146,000 job increase in the last 12 months. The majority of job addition in the last few months are in full time employment. Canadian economy is expected to expand in 2015 particularly if the US economy continues to strengthen. Canada’s job market is expected to add 10,300 positions while the unemployment rate is expected to remain at 6.6%.
8. US Non-Farm Payrolls  and Unemployment Rate: Friday, 13:30. The US labor expected more than expected in November, surging by 321,000 jobs after adding 243,000 on October. This was the biggest jump in employment since January 2012, reaching a12 month average of 224,000. Economists expected a gain of 231,000 positions, however wage growth was still rather weak. The unemployment rate for November was 5.8%, unchanged from October’s reading in line with market forecast. The report also said that the labor force participation rate was unchanged at 62.8%. Us labor market is forecast to expand by 241,000 while the unemployment rate is expected to decline to 5.7%.

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

*All times are GMT.

In this week’s podcast, we offer a preview for 2015:  the Fed hike, EZ QE, slippery oil, UK politics, Big in Japan, AUD down under, Loonie blues and Gold

Further reading:

• For EUR/USD, check out the  Euro to Dollar forecast.
• For the Japanese yen, read the  USD/JPY forecast.
• For GBP/USD  (cable), look into the  British Pound forecast.
• For the Australian dollar (Aussie), check out the  AUD to USD forecast.
• For USD/CAD (loonie), check out the  Canadian dollar
• For the kiwi, see the  NZDUSD forecast.