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Majors, US Dollar Forecast

Forex Weekly Outlook February 9-13

The greenback was on the back foot throughout most of the first week of February, before staging a partial comeback. We now have  Australian employment data, the  BOE Inflation Report, US retail sales, consumer sentiment as the major market movers for this week. Here is an outlook on the highlights coming our way.

After some underwhelming figures from the US,  Non-Farm Payrolls exceeded expectations  with a 257,000 jobs gain in January, with revisions adding another 147K. Full-time positions edged up 777,000, reaching more than 120 million for the first time since July 2008. A much needed comeback in wages was also seen, with +0.5% m/m. This enabled the greenback to end the week on a strong note. In the euro-zone, some good figures were overshadowed by a worsening of the Greek crisis. Talks are set to continue as the deadlines loom. Elsewhere, the RBA went through with a rate cut and oil staged a nice recovery, supporting the battered Canadian dollar. Also the pound enjoyed a comeback,  buoyed by strong PMIs.

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  1. Glenn Stevens speaks: Monday, 0:15. RBA Governor Glenn Stevens is scheduled to speak in Sydney. Australia’s central bank cut its cash rate to a minimum low of 2.25% after 18 months of static rates. Stevens may elaborate on the reasons behind the unexpected rate cut and talk about deflationary pressures and the impact of foreign markets on RBA’s recent policy decision.
  2. EU meeting on Greece: Wednesday. The  EU has called an extraordinary meeting on February 11th and the only topic on the  agenda is Greece. This follows a European tour of Greek FM Yanis Varoufakis, that ended in an acrimonious tone with his German counterpart. On the same day, the waiver of Greek bonds expires at the ECB. Any headlines coming from the meeting are set to rock the euro, especially those from the German representatives
  3. Australian employment data: Thursday, 0:30. Australia’s job market expanded in December, adding 37,400 jobs, well above the 5,300 increase forecasted by analysts. The big job gain lowered the unemployment rate from 6.2% to 6.1%. The increase in positions showed a solid rise in full-time jobs compared to a slight fall in part-time jobs. Furthermore, participation  rate increased to 64.8% in December from 64.7% in the prior month, indicating the economy is expanding. Australia’s labor market is expected to contract by 4,700 jobs, while the unemployment rate is predicted to climb to 6.2%.
  4. Mark Carney speaks: Thursday, 10:30. The  Bank of England  governor, Mark Carney is expected to speak in London about the Inflation report. Carney has launched a strong attack on austerity measures in the Eurozone, claiming such measures are too harsh to enable recovery and may lead the 18-nation single currency area deeper into a debt. He noted that low inflation in the euro-area is potentially dangerous to growth and calls for a real course of action to escape the debt trap.
  5. UK inflation data: Thursday, 10:30.  The Bank of England noted in its November inflation report that the economy is expanding more slowly and price pressures declined from the previous three months.   The slower growth was caused by sluggish expansion in global economies and weaker growth forecast. The Central bank noted the slowdown in the housing market and the low commodity prices weighing on CPI inflation.
  6. US retail sales: Thursday, 13:30. U.S. retail sales plunged 0.9% in December, posting their largest decline in 11 months after positive growth in the fourth quarter. The sharp fall may be attributed to seasonal adjustments after the holiday spending spree. Economists forecasted a 0.2% gain. However lower gasoline prices are expected to boost consumer spending in the coming months. Meanwhile, Core sales excluding automobiles dropped 1.0% following a 0.5% gain in the previous month and lower than the 0.1% increase predicted by analysts. Retail sales are expected to decline 0.3%, while core sales are predicted to drop 0.4%.
  7. US Unemployment Claims: Thursday, 13:30. The number of jobless claims rose less than expected last week, reaching 278,000 following 267,000 in the previous week. Analysts expected a larger gain of 287,000. Claims were volatile in recent months due to seasonal changes, but remained positive. The four-week moving average fell 6,500 to 292,750 last week. jobless claims  is expected to reach 279,000 this week.
  8. US UoM Consumer Sentiment: Friday, 15:00. Consumer sentiment spiked in January to 98.2, exceeding economists’ forecast of 94.2, rising 4.4 points higher than in December. Lower gasoline prices as well as the ongoing improvement in the labor market boosted spending and raising consumer sentiment to an 11-year high. The economy is in solid growth at the beginning of 2015 and is expected to continue this positive trend. Consumer sentiment is expected to remain at 98.2 this time.

*All times are GMT.

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

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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