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Forex Weekly Outlook – January 10-14

A busy schedule awaits Forex traders this week with American Federal Budget Balance, US weekly Unemployment Claims, Inflation Data and many more market movers. Here is an outlook on the major events this week.

Last week ISM Manufacturing PMI reading showed U.S. manufacturing grew at its fastest pace in seven months in December, another encouraging economic data suggesting that expansion will increase in 2011. The Congress’ decision to extend U.S. tax cuts and the $600 billion stimulus program planned in mid 2011 stimulates consumers together giving a boost to the US market. Analysts predict that the US economy is picking up pace and growth expecting 3% growth in the first quarter.

  1. American Federal Budget Balance: Wednesday, 19:00. The Treasury’s deficit for November is $150.4 billion, following $140.4 billion in the prior month, about $20 billion worse than expectations. The two months together, which are the first two months of the government’s fiscal year, shows very little improvement in the deficit: $290.8 billion vs $296.7 billion. Funding Government spending is a heavy burden that points to another year of enormous debt for the nation.
  2. Australian Employment Data: Thursday, 0:30. Employment in Australia soared in November gaining 54,600 workers and doubling analysts’ expectations of 21,300. Unemployment rate also decreased 0.2% to 5.2% from 5.4% in October. This encouraging reading may help boost consumer spending as well and boost Australia economy. 25,300 new workers are expected in December and a drop in Unemployment Rate to 5.1%.
  3. British Rate Decision: Thursday, 12:00. Following another decision to maintain rates at 0.50%, Andrew Sentence the most hawkish member of the Bank’s nine-strong Monetary Policy Committee claims the Bank of England should raise interest rates in order to contain inflation and signal that the economy is beginning to return to normal after the recession. Nevertheless rates are expected to remain 0.50%.
  4. Euro-Zone Rate Decision: Thursday, 12:45. European Central Bank kept interest rates unchanged at 1.0%, in line with market expectations. It is predicted that the central bank will keep its key interest rate unchanged throughout 2011 due to low inflation, moderate growth and remains from the sovereign-debt crisis.
  5. American Trade Balance: Thursday, 13:30. Trade Balance Deficit Decreased in October to $38.7B following $44.6B in September as exports increased and imports decreased. Another increase in deficit to $41.2B is predicted now.
  6. US PPI: Thursday, 13:30. US  producer prices rose by  0.8 % last month, and Core producer prices (excluding food and energy and thus favored by the Fed for being less erratic) climbed to 0.3%, to a yearly gain of 1.2 per cent. This growth trend shows the improvement in the US economy and especially in the job market. Another rise of 0.8% in producer prices  is expected with a small drop to 0.2% in the Core PPI.
  7. US Unemployment Claims: Thursday, 13:30. The number of new unemployment Claims rose 18,000 to 409,000 last week following the fantastic drop to 391,000 in the week before. However the low figure could be explained by the Holiday season where offices were closed and a lot of people didn’t have a chance to file unemployment claims. Nevertheless there is a significant improvement in the job market. A decrease of 4,000 in Unemployment Claims is expected this week.
  8. Ben Bernanke Speaks: Thursday, 18:00. Federal Reserve Chairman Ben Bernanke will deliver a speech titled “Overcoming Obstacles to Small Business Lending” at the Federal Deposit Insurance Corporation Forum, in Arlington. He may address the improvement in consumer and business spending the Unemployment situation and the risks of low inflation.
  9. US Inflation Data: Friday, 13:30.  Core consumer price inflation rose 1.0% in November which was in line with expectations. Consumer prices including food and energy costs rose less-than-expected in November, increasing by a seasonally adjusted 0.1%, after rising by 0.2% in October. According to the data, year-on-year, consumer prices rose by 1.1% in November, after rising by 1.2% in October. Core consumer price inflation expected to rise again by 0.1%.
  10. US Retail Sales: Thursday, 13:30. Retail Sales increased more than forecasted in November gaining 0.8% while analysts expected 0.6% raising optimism among small businesses  to a three-year high with a 93.2 reading. Core Retail Sales excluding   volatile food and energy costs, rose 1.2 percent from November 2009, the smallest year-over-year gain in five months due to lack in pricing power. Retail Sales are expected the same gain of 0.8% whole Core Retail Sales are expected a smaller rise of  0.7%.
  11. US Prelim UoM Consumer Sentiment: Friday, 14:55. U.S. UoM consumer sentiment rose more-than-expected to a seasonally adjusted 74.20, from 71.60 in November. This puts the index at its highest level since June but still at a very low level from a long-range perspective. The rise in Consumer sentiment is expected to go further to 75.6.

* 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