Non-Farm Payrolls brought an excellent surprise to the dollar. In the upcoming week we’ll indeed see if the tables have turned. Rate decisions are expected this week in Britain, Switzerland, Canada and New Zealand. Also note employment figures in Australia and American Retail Sales to close the week. Thursday is an extremely crowded day. Here’s an outlook for the upcoming week:
Have the tables turned on the dollar? Did the recovery arrive to the job market, and is a rate hike coming in the US? Those are the big questions that will accompany us following the positively-shocking NFP. My 5 notes for the Non-Farm Payrolls are valid also for the next releases. Casey Stubbs analyzes this move and already sees an opportunity in the EUR/USD following this event.
OK, let’s see what’s up for the second week of December:
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Monday, December 7th: Australian ANZ Job Advertisements start the week with a first indication of the Australian job market.
Swiss Retail Sales are expected to turn positive this month. In Europe, Jean-Claude Trichet will make two public appearances and also German Factory Orders will impact the Euro. The Euro enjoyed good figures and managed to rise at the beginning of the week.
In Canada, Building Permits are predicted to rise again, for the third month in a row. Ben Bernanke will set the tone for the day in a public appearance in Washington, and will probably relate to the job figures.
Tuesday, December 8th: Australia’s Glenn Stevens will make a public appearance, and might hint about the future policy of the RBA, following the rate hike last week.
In Britain, Manufacturing Production is predicted to rise again, while CBI Industrial Order Expectations are predicted to remain negative.
The more interesting figure on Tuesday in Britain is the NIESR GDP Estimate that proved very accurate, much better than the median of economists regarding the GDP.
Canadian Housing Starts will be a warm up for the rate decision that follows immediately after it. Mark Carney isn’t expected to raise the Overnight Rate, despite excellent job figures on Friday. GDP is still moving slowly. The BOC usually lays out future policy in a straightforward way – so USD/CAD will shake by the words of the BOC Rate Statement.
In Japan, Q3 GDP is expected to be revised to 0.8%, after the preliminary 1.2% rise initially printed.
Wednesday, December 9th: British Nationwide Consumer Confidence can sure impact the Pound in the hide of the night. Later, Trade Balance and the Annual Pre-Budget Release are due in Britain. The government’s deficit is problematic for the Pound.
One of the things that weighs on the Pound is the lack of an exit strategy, which is seen in other countries.
Swiss Unemployment Rate is predicted to tick up to 4.2%, continuing a trend. German Final CPI and a speech by Axel Weber will impact the Euro.
A rate decision in New Zealand isn’t expected to be different – the Official Cash Rate of 2.5% is expected to be maintained. This time, the market isn’t expecting a raise. The policy for 2010 might be laid out in the RBNZ Rate Statement or in the RBNZ Press Conference that will follow.
Thursday, December 10th: Australian employment figures supply a strong start for the day -Employment Change is expected to edge up, and so is the Unemployment Rate which is expected to rise to 5.9%. The Aussie rose gradually on the rates, well, until the NFP came to town.
Switzerland makes its quarterly rate decision. The Libor Rate is predicted to remain unchanged at 0.25%. The Swiss National Bank will issue the accompanying SNB Monetary Policy Assessment which might talk about the future and about intervention in the forex markets. The recent weakness of the Euro might troubling for the SNB, which wants EUR/CHF to stay above 1.50. Interventions by central banks are a trade opportunity.
Like in past months, the focus on the rate decision in Britain isn’t on the Official Bank Rate, which is expected to remain at 0.5%, but rather on the bond buying scheme, also know as the Asset Purchase Facility or Quantitative Easing. Bottom line – a bigger program is bad for the Pound. Last month’s expansion to 200 billion was better than expected, but the members were split three ways in their decision. Also note the MPC Rate Statement that will accompany this event.
Two rate decisions aren’t all the major events for one day: American and Canadian Trade Balance are expected to show a smaller deficit in Canada and a bigger deficit in the US.
American Unemployment Claims will be interesting to watch after the excellent NFP on Friday. Jobless claims are predicted to edge down.
Friday, December 11th: Chinese Industrial Production might impact the whole market, and especially the Aussie at the start of the day. In Britain, PPI is predicted to rise modestly and not put any pressures for a rate hike.
American Retail Sales are expected to rise once again. If so, this will be another strong finish for the week. Also note Core Retail Sales. The last notable event comes from the University of Michigan, that published the preliminary Consumer Sentiment.
That’s it for the major events this week. I’ll later publish in-depth coverages for many currencies. Stay tuned!
- For a broad view of all the week’s major event in all currencies, read the forex weekly outlook.
- For the Euro, read the EUR USD Forecast.
- For GBP/USD, look into the British Pound forecast.
- For the Australian dollar, read the AUD/USD forecast.
- For USD/CAD, check out the Canadian dollar forecast.
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