Search ForexCrunch

The dollar was beaten in the first week of January and staged only a small recovery. Janet Yellen’s testimony stands out, but also watch out for retail sales and consumer sentiment. These are the main market movers for this week. Here is an outlook on the main events on forex calendar.

The poor ISM Non-Manufacturing PMI showing a significant slowdown in America’s largest sector hit the dollar hard. Dovishness from Draghi and from Carney could not stop the dollar’s fall at first.  A mixed jobs report eventually provided some relief:  while the headline showed lower than expected monthly job gains  at 151K,    the  unemployment rate declined to 4.9% from 5% and wages grew significantly in January, rising 2.5%. Despite the poor headline employment number, analysts emphasize the positive sides to this report, saying the payroll figure doesn’t change the fact that they’ve been growing at a solid pace recently. Will the US economy pull out of its soft patch in the coming weeks?  Let’s start:

  1. US JOLTs: Tuesday, 15:00. While this jobs-related report is lagging (it is for December in this case), the Fed watches it closely for long-term developments. The number of job openings is expected to advance from 5.43 to 5.54 million. Also note the number of quits: more quits mean more confidence in the labor market.
  2. Janet Yellen speaks: Wednesday and Thursday at 15:00. Federal Reserve Chair Janet Yellen will testify on the Semiannual Monetary Policy Report before the House Financial Services Committee, in Washington DC. Yellen may explain the Fed’s decision to leave rates unchanged on its January meeting and may offer clues about possible timing for the next hike. The weakness overseas in China, Japan and Europe raised concerns about their effects on US economic outlook. Therefore, policy makers decided to wait and let the storm pass before raising rates again.
  3. US Crude Oil Inventories: Wednesday, 15:30. U.S. crude oil inventories surged more than expected last week. Inventories edged up 7.8 million barrels to 502.7 million barrels beating analysts’ expectations for an increase of 4.8 million barrels. Economists expect this growth trend to continue.
  4. US Unemployment Claims: Thursday, 13:30.  The number of jobless claims increased unexpectedly last week by 8,000 to 285,000 as more Americans sought unemployment benefits. However, the reading still suggest that employers are still eager to hire since the number of claims stayed below the 300,000 threshold.   The four-week moving average of claims rose 2,000 to 284,750 last week. Economists had forecast claims rising to 280,000. US jobless claims are expected to reach 287,000 this week.
  5. Glenn Stevens speaks: Thursday, 22:30. RBA Governor Glenn Stevens testifies before the House Representatives in Sydney. The RBA decided to keep rates on hold at its last cash rate meeting last week. Concerns over the global economy especially in China, one of its main trading partners, caused a further decline in Australia’s terms of trade. However, Australia’s domestic economy has improved in 2015 business conditions advanced above average levels, employment growth picked up and the unemployment rate declined.
  6. US Retail Sales: Friday, 13:30. US retail sales declined in December by 0.1%, the weakest reading since 2009, raising concern about the pace of consumer spending in 2016. The release was in line with market forecast. In 2015, sales climbed 2.1%, the smallest advance of the current economic expansion. Weaker sales in electronics stores, clothing merchants and grocers, indicate Americans preferred to increase their savings despite the constant improvement in the labor market. Core sakes, excluding automobiles also contracted by 0.1% while expected to climb 0.2%. Economists expect retail sales will rise 0.1%, while core sales will remain flat.
  7. US UoM Consumer Sentiment: Friday, 15:30. Consumer confidence surged in January to the highest level in seven months, reaching 93.3, following 92.6 in December. The reading suggests low inflation had a favorable impact on households, whose outlook for wage gains remained subdued. Economists expected a reading of 92.7. The current conditions index dropped to 105.1 from the prior month’s 108.1, while the six month outlook edged up to 85.7, the highest since June, from 82.7. Consumer confidence  is expected to rise to 92.6 this time.

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

*All times are GMT.

Our latest podcast is titled  Americans get a raise, negativity in Japan, Gas Naturally Low

Follow us on Sticher or on iTunes