The US dollar was mixed in a week dominated by Greek headlines. US Consumer Confidence, inflation data, GDP numbers from the US and the UK and most importantly speeches from Mario Draghi and Janet Yellen’s stand out. These are the major events on our Forex calendar. Here is an outlook in the highlights of this week.
The Greek drama remained at the center of attention especially as Germany opposed the bailout extension proposed by Greece, but there seems to be light at the end of the tunnel. From the US: jobless claims release came out better than expected but a disappointment came from the Philly Fed index The FOMC minutes release was somewhat dovish, but also stale, giving more emphasis to Yellen’s speech. In the UK, employment numbers and meeting minutes were positive, but retail sales disappointed and limited cable’s gains. The BOJ hasn’t moved after weak GDP data, while the loonie suffered sliding oil prices. The Aussie and kiwi enjoyed upbeat data.Updates:
- German Ifo Business Climate: Monday, 9:00. German business moral edged up for the third straight month in January, reaching 106.7 from 105.5 in December, in line with market forecast. The weak euro boosted exports and is expected to continue its decent amid the fresh bond buying program initiated by the ECB to spur growth. Stronger German growth will help the Euro-area out of its sluggish state. German business is expected to rise further to107.4.
- Mario Draghi speaks: Tuesday, 14:00, Wednesday 14:00. ECB President Mario Draghi is scheduled to speak in Frankfurt and in Brussles before the European Parliament. Draghi refrained from addressing the Grexit scenario, saying it made no sense to speculate on Greece abandoning the euro zone. Draghi may refer to the Greek negotiations, the decision to provide more ELA to Greece and the massive QE decision. It will certainly be interesting.
- US CB Consumer Confidence: Tuesday, 15:00, . U.S. consumer confidence rose to a seven-year high in January, reaching 102.9 from an upwardly revised 93.1 in December. Optimism increased about the labor market and economic conditions. Analysts expected a small rise to 95.1. Responders were also positive on short-term outlook and wage growth. Low inflation due to gasoline prices also boosted consumers’ spirits. Consumer confidence is expected to reach 99.6 this time.
- Janet Yellen testifies: Tuesday, 15:00 and Wednesday at 15:00. Federal Reserve Chair Janet Yellen will testify before the House Financial Services Committee, in Washington DC. Yellen may address the rate hike issue, the weak inflation trend and the strengthening labor market. Market volatility is expected. We have seen how the meeting minutes were dovish, countering the relatively hawkish statement. Now we will get a real time update, with questions and answers as well.
- US New Home Sales: Wednesday, 15:00. New home sales increased sharply in December to a seasonally adjusted annual rate of 481,000, following 452,000 in the previous month. The 11.6% climb indicates an improvement from 2014. Stronger labor market and better economic conditions have facilitated the positive trend of home acquisitions. Furthermore, sales of existing homes rose 2.4% in December to a seasonally adjusted annual rate of 5.04 million. New home sales are predicted to shrink to 447,000 in January.
- Chinese HSBC Flash Manufacturing PMI: Wednesday, 1:45. As China emerges from the long New Year celebrations, the independent indicator from HSBC is set to give us an updated picture for the world’s second largest economy. In January, the number stood on 49.7 points, just under the 50 point mark separating growth and contraction. A tick down to 49.6 is on the cards. This has a particular impact on Australia, but also on the whole world.
- UK GDP data: Thursday, 9:30. The first estimate of GDP growth from the UK showed a growth rate of 0.5% in Q4, less than expected. This will likely be confirmed in the second release. The growth rate reflects a slowdown from previous quarters which saw strong growth. Elections are coming in May and this publication has political importance as well.
- US Inflation data: Thursday, 13:30. U.S. consumer prices registered their biggest fall in December, dropping 0.4%, the largest decline since December 2008, following a 0.3% decline in the prior month. On a yearly base, CPI gained a mere 0.8%, the weakest reading since October 2009. The continuous decline diminishes the possibility of a rate hike. Meanwhile, Core prices without food and energy costs remained unchanged in December. In the 12 months through December, core CPI increased 1.6%, the smallest gain since February. U.S. consumer price index is expected to decline 0.6% while core CPI is forecasted to rise 0.1%.
- US Durable Goods Orders: Thursday, 13:30. Capital goods orders plunged 3.4% in December amid slowing global growth and low crude oil prices. Core orders excluding aircraft, dropped 0.8% in December while expected to gain 0.5%. The strong dollar also held back new investments. Durable goods orders took a step back in the fourth quarter of 2014 after strong gains in the previous two quarters. Durable Goods Orders are expected to gain 1.7% while core orders are expected to add 0.6%.
- US Unemployment Claims: Thursday, 13:30. The number of Americans filing initial claims for unemployment benefits fell 21,000 last week to 283,000, indicating a positive momentum in the US labor market. Analysts expected claims to reach 293,000. The four-week moving average of claims, a more stable measure of labor market trends fell 6,500 to 283,250 last week. The number of jobless claims is expected to reach 285,000 this week.
- US GDP data: Friday, 13:30. After a strong 5% annualized growth rate in Q3, the initial number for Q4 showed a gain of only 2.6%. And, it’s expected to get worse now, with a downgrade of growth to only 2.1%, in a “payback quarter”.
*All times are GMT.
That’s it for the major events this week. Stay tuned for coverage on specific currencies.
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- For EUR/USD, check out the Euro to Dollar forecast.
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- For GBP/USD (cable), look into the British Pound forecast.
- For the Australian dollar (Aussie), check out the AUD to USD forecast.
- For the kiwi, see the NZDUSD forecast.
- For USD/CAD (loonie), check out the Canadian dollar
- For the Swiss Franc, see the USD/CHF forecast.