The US dollar had a very positive week, gaining against almost all currencies A rate decision in Japan, US retail sales and the G20 meetings are this week’s top events. Here is an outlook on the main market-movers ahead.
The ECB also joined the currency wars: Mario Draghi warned about the strength of the euro, and sent it tumbling down. The yen fell to new lows, but began re-strengthening as the G-20 summit nears. US ISM Non-Manufacturing PMI declined to 55.2 from 56.1, still well within growth territory with a rise in the employment factor, indicating the US economy is in a steady growth trend. Will this growth trend continue?
Let’s Start
- Swiss inflation data: Tuesday, 8:15. In December, consumer prices declined 0.2% from the previous month, following the 0.3% drop in November, missing predictions for a 0.1% fall. Lower prices for clothing and footwear as well as for medication were the main cause behind the monthly decline. December’s decline represents the 15th consecutive month of annual deflation and this supports the EUR/CHF peg.
- US Retail sales: Wednesday, 13:30. U.S. consumers spent more at retail businesses in December, with a 0.5% rise following a 0.4% increase in November. Automobiles furniture and clothing registered the main rise. Meantime, core retail sales, excluding gas, building materials and autos, edged up 0.6% after a 0.5% increase in November indicating an improvement in consumer spending. However consumer spending is expected to slow down in the first half of 2013 amid new taxes which will affect economic growth. Retail sales are expected to gain 0.1% while core sales are forecast to grow 0.2%.
- Japanese rate decision: Thursday. The Bank of Japan doubled its inflation target to 2% and made a commitment to buy unlimited assets starting from 2013. However central bank members were divided on the new inflation target of 2% roughly imposed by the new Prime Minister Shinzo Abe calling for bolder action to overcome deflation and boost the economy out of recession. No change in rates is expected.
- US Unemployment Claims: Thursday, 13:30. A smaller number of 366,000 Americans sought unemployment benefits last week, indicating a steady improvement in hiring. This figure followed a 371,000 reading in the preceding week. The four-week average, dropped to 350,500, the lowest in nearly five years mainly due to seasonal factors. Another decline to 361,000 claims is anticipated this time.
- US UoM Consumer Sentiment: Friday, 14:55. Consumer sentiment unexpectedly plunged for a second straight month to its lowest level in over a year reaching 71.3 following 72.9 in November. The low readings go in line with the federal budget negotiations calling for higher taxes and further spending cuts. The reading also revealed that the debt ceiling debate is far from being resolved and is a constant worry for Americans.
- G-20 Meetings: Friday and Saturday. Finance ministers and central bankers meet in Moscow and one of the main issues on the global economic agenda is forex: Japanese authorities have already begun expressing worries about the rapid weakening of the yen, a big change from the previous tone. Statements from the meetings usually move the markets.
That’s it for the major events this week. Stay tuned for coverage on specific currencies
*All times are GMT.
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
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