Forex Weekly Outlook – January 19-23 2009

Before the new week begins, there were major events during the weekend. The Gaza war is nearing its end, with a unilateral cease fire declaration by Israel. If it holds, the ending of this conflict in Gaza will impact oil prices, stock prices, and forex trading, especially USD/CAD and AUD/USD. More about the Gaza cease fire and forex trading.

Another major news item this weekend, is the British bailout plan. The British government plans to create a bank that will absorb bad loans / bad debt. The scale of this plan is huge: 200 billion pounds. This will bring the total expenses of dealing with the crisis to almost one trillion pounds, or 33,000 for every British tax payers. More details about this bailout plan will be officially released at the beginning of the week.

Forex Calendar

This week’s major events are interest rate decisions in Canada and Japan,  ZEW Economic Sentiment in Europe,  Obama’s inauguration, and Britain’s GDP. Not much economic data is due from the US, but there are lots of other important economic releases, that will be covered below.

On Monday, the monthly  Rightmove HPI will be published in Britain, and might impact the pound. In Switzerland, the yearly  Retail Sales will be published and is expected show a growth of 1.5%, less then last year.

In Europe, Jean Claude Trichet will keep on talking. After lowering the interest rates last week, he hinted that a further cut isn’t expected in February. In this speech, he might hint about the expected decision in March.

In New Zealand, the quarterly CPI will published, and is expected to drop, something that didn’t happen for a long long time.  

And in Japan, the monthly  Tertiary Industry Activity is expected to drop by 0.8%.

Tuesday features a very big geo-political event: Barack Obama will inaugurated as the 44th president of the USA. His big plans, as well as his rhetoric, are expected to spark optimism. More about Obama’s inauguration and Forex Trading.

The yearly Consumer Price Index (CPI) will be released in Britain. Also the the Core CPI is due. Both are expected to show a rise, but less than the previous year.

In Europe, the respected  German ZEW Economic Sentiment is expected to show a drop, at -42.9. It will be followed by the  ZEW Economic Sentiment for all of Europe.

Tuesday is also a big day in Canada: the Bank of Canada will publish the Overnight Rate, which is expected to drop 0.5%, to 1%. The BOC will issue a rate statement immediately after declaring the rate.

In the evening, BoE’s Mervyn King will talk. In this speech, he might shed light about the Bad Loans bank that was mentioned at the beginning of this post. It should be very interesting.

And to close the day, the  Core Retail Sales and  Retail Sales are due in New Zealand. These are major indicators for the kiwi.

On Wednesday, ECB’s Trichet will testify in the European parliament. In addition, the German PPI will be released.

In Britain, the  Claimant Count Change, is an early unemployment indicator, so it should shake the pound. It’s expected to be at 81.6.

Another important release in Britian is the MPC Meeting Minutes. This will tell us what the BoE was talking about when lowering interest rates two weeks ago.

More data in Britain on Wednesday:  Prelim M4 Money Supply,  Average Earnings Index,  Public Sector Net Borrowing and the late  Unemployment Rate, expected at 6.1%.

On Thursday, the BOJ will set the rate. It’s expected to stay at 0.1%. Apart from the  Overnight Call Rate, the BOJ will hold a press conference and make a  Monetary Policy Statement. The statement is more important than the rate in this case.

In Europe, the monthly  French Consumer Spending,  ECB Monthly Bulletin and  Industrial New Orders are due on Thursday. The latter is expected to drop by 5%. In Switzerland, the  ZEW Economic Expectations will impact the chocola. In Britain,  CBI Industrial Order Expectations is expected to be at -39.

In Canada, the central bank will continue talking, with a  Monetary Policy Report. In addition, monthly  Retail Sales and  Core Retail Sales  will set the tone for the loonie.

And finally this week, some data from the US:  Building Permits are expected to be at 620,000, supplying a peek on the dire American real estate. In addition, the weekly  Unemployment Claims are due to be at 545,00.

On Friday, there are many figures from Europe:  and Services PMI from Germany, France and Europe in total.  In Canada, the CPI and Core CPI will be released.

The big release of the day comes from Britain: the quartely  Prelim GDP, which is expected to drop by 1.2%, a serious economic contraction.  In addition, British  Retail Sales will impact the pound.

That’s it. Happy Forex Trading!