The US dollar had a rather positive week, making gains against quite a few currencies. After the G-20 summit concludes, will this trend continue or reverse? US FOMC meeting minutes, housing and inflation figures are the highlights of the upcoming week. Here is an outlook for the major market movers that await us.
The G-20 statement refrained from reproaching Japan’s policies of using aggressive monetary and fiscal policies to lower the yen, despite a wide agreement. Mario Draghi chose to remark that disputes over currencies were “inappropriate, fruitless and self-defeating”. All in all, world powers allowed for currency wars. 4 currencies are winners and 4 are losers. In Europe, GDP figures showed that the euro-zone is in a deep recession. In the US, the drop in jobless claims and the OK retail sales continue painting a picture of slow and steady growth.
- Mario Draghi speaks: Monday, 14:30. Mario Draghi president of the ECB is scheduled to speak before the European Parliament’s Economic and Monetary Committee, in Brussels. His words may cause volatility in the market, as we’ve clearly seen in the recent rate decision.
- German ZEW Economic Sentiment: Tuesday, 10:00. German economic sentiment jumped up to 31.5 points in January following a reading of 6.9 points registered in December. Analysts expected a reading of 12.2 points. The elevated reading suggests that Germany’s economic prospects improved considerably for the six months ahead. A further rise to 35.3 is expected this time.
- US Building Permits: Wednesday, 13:30. US housing permits increase to an annual rate of 903,000 in December from a revised November rate of 900,000 posting a 0.3% rise. The reading is 28.8% higher than the December 2011 estimate of 701,000. A further improvement to 920,000 is expected now.
- US PPI : Wednesday, 13:30. U.S. producer prices declined 0.2% in December. This was the third consecutive drop amid lower food prices. Economists expected prices to drop 0.1% last month. The ongoing decline brought 12-month inflation to 1.3%, the lowest level since July. A rise of 0.3% is predicted.
- US FOMC Meeting Minutes: Wednesday, 19:00. In the recent decision (the first for 2013), the Fed made no policy changes but said that the economy paused. It will be interesting what members discussed. The previous meeting minutes showed that some Federal Reserve policy makers expected their $85 billion monthly bond purchases to end sometime in 2013, The members were divided on the time frame, between mid-year to the end of 2013. Bernanke recently mentioned that the economy is recovering. Will this be reflected in the data?
- US inflation data: Thursday, 13:30. Consumer prices in the U.S. remained contained in December rising 0.3% in line with predictions amid an increase in food prices and energy costs. Meanwhile core prices excluding food and energy increased 0.1% for the fifth time in a 6-month period. CPI is forecast to gain 0.1% while core CPI is predicted to climb 0.2%.
- US Unemployment Claims: Thursday, 13:30. The number of people filing initial claims for unemployment benefits dropped sharply by 27,000 last week, indicating hiring has improved. This was the lowest level in three weeks. The four-week average stands at 352,500, after reaching a five-year low two weeks ago. An increase to 361,000 is expected now.
- US Existing Home Sales: Thursday, 15:00. A decline in the number of homes for sale, lowered trades of existing homes down 1.0% in the December to an annual rate of 4.94 million following 4.99 million in November. The reading was below the 5.09 million rise predicted by analysts. A small decline to 4.91 million is anticipated.
- US Philly Fed Manufacturing Index: Thursday, 15:00. Factory activity in the U.S. mid-Atlantic region unexpectedly declined in January, dropping to 5.8 points, after posting 8.1 points in December. The reading missed predictions for a 7.1 reading. A gain of 0.7% is forecast.
- Canadian inflation data: Friday, 13:30. Consumer prices declined sharply by 0.6% in December, after a flat reading in November. This decline was lower than the 0.2% drop anticipated but was in line with the underlying measures. The recent readings were below the BOC’s forecast roaming around 1.0% rather than the 2.0% forecasted.
*All times are GMT.
That’s it for the major events this week. Stay tuned for coverage on specific currencies. In the meantime, here is something that may be of interest: Pitfalls of Margin Trading
- 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