The euro was on the back foot due to the crisis in Cyprus, but this didn’t turn into a general “risk off” environment and the dollar retreated against most other currencies. Forex dynamics have clearly changed. Important events such as , Ben Bernanke’s speech, US Durable Goods Orders, Consumer confidence and more housing data are among the major market movers this week. Here is an outlook on the coming releases.
The drama in Cyprus has dominated the news and is still evolving during the weekend. At the time of writing, the Cypriot parliament has passed a series of bills, apart from the delicate bank levy proposal. Taxing bank deposits is a dangerous precedent. Another flow of positive US data was released, with existing home sales rising from 4.94 to 5.02 million; The Philly Fed Manufacturing Index rebounded strongly from -12.5 to plus 2, and jobless claims remained at low levels: 334,000. Will the US economy continue to strengthen in the coming months?
- Ben Bernanke speaks: Monday, 17:15. Federal Reserve Chairman Ben Bernanke is scheduled to speak in London with the BOC Governor Mervyn King. Ben Bernanke supports the continuation of the stimulus plan, despite the recent flow of positive data released, claiming the US economy is still in need of incentives to bolster growth. He may further explain his point during this panel discussion.
- US Durable Goods Orders: Tuesday, 12:30. Durable goods orders excluding transportation surged 1.9% in January, the largest gain since December 2011, following a 1.0% gain in December. The reading was well above economists’ predictions for a 0.2% climb. However orders for durable goods plunged 5.2%, amid a sharp drop in demand for civilian and defense aircraft, a highly volatile category. Nevertheless the market activity seems positive. Core orders are expected to climb further by 0.7%.
- US CB Consumer Confidence: Tuesday, 14:00. U.S. consumer confidence edged up in February to 69.6 from 58.6 in January, exceeding market forecasts for a reading of 60.8. Consumers were relieved after the shock effect caused by the fiscal cliff uncertainty and payroll tax cuts appears. A small drop to 69.3 is forecast this time.
- US New Home Sales: Tuesday, 14:00. New U.S. single-family home sales soared to their highest level in 4-1/2 years in January while houses supply was the smallest since March 2005, indicating the housing sector recovery is gaining pace. Sales climbed 15.6% to a seasonally adjusted 437,000-unit annual rate, after posting 378,000 in the previous month. A small decline to 426,000 is expected now.
- US Pending Home Sales: Wednesday, 14:00. Pending home sales rebounded from January’s fall with a 4.5% rise, indicating a strong improvement in the housing market. The reading topped predictions for a 1.7% increase. Dwindling housing inventory has helped sellers improve prices, boosting the housing market in the first quarter. A drop of 0.4% is predicted now.
- Canadian GDP: Thursday, 12:30. Canada’s gross domestic product contracted by 0.2% in December from the month earlier, amid a decline in inventory investment and weak imports. The last quarter posted a small gain of 0.2% as in the previous quarter, missing the BOC’s forecast. Finance Minister Jim Flaherty noted that while he’s confident Canada remains on the right track, risks remain. Canadian economy is expected to register a 0.1% expansion this time.
- US Unemployment claims: Thursday, 12:30. The US job market has maintained its positive momentum last week with fewer than forecast jobless applications reaching 336,000 only 2,000 more than in the preceding week, much lower than the 343,000 projected by analysts. This was a meaningful improvement, consistent with other better employment data. A small rise to 340,000 is expected now.
*All times are GMT.
That’s it for the major events this week. Stay tuned for coverage on specific currencies
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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