Forex Weekly Outlook -May 23-27

In the past week, the dollar consolidated its recent gains. Is it ready for the next move? US Housing data, US and UK GDP, and US unemployment claims are the main events this week. Let’s review the main market-movers lined up.

Last week the U.S. has nearly reached its debt ceiling of the $14.294 trillion limit resurfacing the debate about the measures needed to be taken to reduce the national debt. Government officials are trying to achieve an agreement with the Republicans to raise the debt ceiling while planning to cut long term deficits. Will these measures succeed? Time will tell.

The European debt crisis continue to dominate the scene, with Greece getting closer to a default, hidden debt in Spain, and even a credit warning for Italy. What news will the upcoming week provide?

1. Euro-Zone German Ifo Business Climate: Tuesday, 9:00. German business sentiment decreased to 110.4 in April within expectations following 111.1 in March. However German companies’ confidence is still high compared to other countries. A further drop to 110.1 is expected.
2. US New Home Sales: Tuesday, 15:00. Sales of new homes increased in March to a seasonally adjusted 300,000 unit annual rate from 270,000 in February. This is a small improvement but still lower than sales of previously owned houses. Another gain of 308,000 is predicted.
3. UK Revised GDP: Wednesday, 9:30. Gross domestic product (GDP) dropped 0.6% in the fourth quarter more than the 0.5% decrease anticipated and following 0.5% contraction in the previous quarter indicating contraction in the UK economy. A gain of 0.5% is anticipated, a repeat of the initial call.
4. US Core Durable Goods Orders: Wednesday, 13:30. U.S. core durable goods orders designed to last longer than 3 years, rose by 1.3% in March following 0.6% rise in the previous month. Analysts predicted 1.6% increase. This rise indicates a better growth potential for the US economy in the 2nd and 3rd quarters.  A smaller gain of 0.7% is expected now.
5. US Prelim GDP: Thursday, 13:30. Preliminary GDP rose by 2.8% in the 4th quarter below 3.3% increase expected. The growth in the primarily GDP indicates a decrease in imports and an increase in exports. Prelim GDP is expected to rise by 2.2% this time, an upwards revision of the first release.
6. US Unemployment Claims: Thursday, 13:30. A significant drop occurred last week in the number of Americans filing applications for  unemployment benefits  decreasing by 29,000 to 409,000 while economists predicted a drop to 420,000 indicating a definite improvement in the job market. A small increase to 412,000 is forecasted.
7. US Pending Home Sales: Friday, 15:00. Pending home sales of existing homes surged 5.1% well above expectations for 1.1% rise following 0.7% gain in the previous month Indicating a recovery in the US housing market. A drop of 0.9% is predicted now.

*All times are GMT.

Further reading:

• For EUR/USD, check out  the  Euro/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 forecast.
• For the New Zealand dollar (kiwi), read the  NZD forecast.
• For USD/CAD (loonie), check out the  Canadian dollar forecast.