The Swiss franc stormed back to the scene and was unexpectedly a huge winner in one of the more dramatic weeks in currencies and the forex industry. There is probably little time to rest as a busy week awaits: 3 rate decision with the ECB one taking center stage, as well as employment data from the UK, housing data from the US and more. These are the main market movers on Forex calendar. Join us as we explore the highlights of this week.
The Swiss National Bank stole the show when it removed the 1.20 floor under EUR/CHF after more than 3 years and out of the blue. This not only led to double digit leap in the franc but also to tumble in the euro that lost its bid and quite a few scarred forex brokers. This huge event will have long lasting implications on the euro, the dollar, the franc and the way brokers manage their risks. US was underwhelming: a surprise 0.9% drop in retail sales registering their largest decline in 11 months This contradicted a jump in consumer confidence. In the manufacturing sector the Philly Fed index fell to 6.3 points, while the Empire State one beat expectations. Jobless claims disappointed while JOLTS job openings beat. Will we see better figures this week? Elsewhere, the pound and the kiwi showed stability while the Aussie enjoyed positive employment figures and the loonie chopped around. Let’s start:Updates:
- Chinese GDP: Tuesday, 2:00. The economic giant is slowing down. Is it the desired slide in output or is it out of control? This is an open debate going on for a very long time. And are the numbers real? Even if they are made up, the publication has a big impact on the Aussie and also sets the global mood. After reporting an annualized growth rate of 7.3% in Q3 2014, a level of 7.2% is on the cards now.
- German ZEW Economic Sentiment: Tuesday, 10:00. German investor sentiment edged up in December to 34.9 from 11.5 in November. This was the second consecutive rise, indicating increased optimism for a pickup in Europe’s largest economy. Economists expected a lower figure of 19.8. German economy expanded by a mere 0.1% in the third quarter, bit a boost in consumer spending is expected to improve growth in the final quarter of 2014. German analysts’ sentiment is expected to improve to 40.1.
- NZ inflation data: Tuesday, 21:45. New Zealand consumer prices increased 0.3% from the second quarter, falling short of the 0.5% rise expected by analysts. On a yearly base, consumer price index rose 1% in the third quarter after a 1.6% rise in the previous quarter indicating slower inflation. The absence of inflationary pressures enabled Governor Graeme Wheeler to keep borrowing costs unchanged for longer. Consumer prices are expected to remain unchanged this time.
- Japan rate decision: Wednesday. The Bank of Japan voted to keep its monetary policy unchanged at its December policy meeting, increasing its monetary base at an annual pace of JPY 80 trillion. The decision was in line with market forecast. The BOJ noted the improvement in exports and a recovery in industrial output as well as, rising inflation expectations. Rates are expected to remain unchanged this time.
- UK employment data: Wednesday, 9:30. UK Jobless Claims dropped in November by 26,900 beating expectations for a 19,800 decline. Furthermore, on a quarterly basis, average earnings excluding bonuses edged up 1.6%. UK unemployment in the third quarter fell by 63,000 to 1.96 million indicating an improvement in British labor market. UK unemployment claims are expected to drop 24,200 in December.
- US Building Permits: Wednesday, 13:30. The number of building permits issued in November fell 5.2% to a seasonally adjusted annual rate of 1.04 million, indicating weakness in construction of single-family homes. However, Analysts forecast the housing sector will maintain its momentum in 2015 as job growth continues and mortgage rates remain accommodative. The number of building permits is expected to increase to1.06 million.
- Canadian rate decision: Wednesday, 15:00. The Bank of Canada kept its rate at 1% in December, amid stronger economic recovery in exports and business investment. BoC’s statement was more optimistic than before amid widening expansion on top of strong consumer spending, which may lead to self-sustaining growth. Poloz said the said the output gap is smaller and that the economy has sufficient room to grow before it reached full capacity. Rates are expected to remain at 1%.
- Eurozone rate decision: Thursday, 12:45, press conference at 13:30. The European Central Bank kept interest rates unchanged in December leaving deposit facility at negative 0.20%. Draghi said the central bank requires more time to assess the impact of dropping oil prices on inflation, growth and wages, before deciding the course of action. Falling energy costs resulted in outright deflation. The ECB continued to examine a range of options for quantitative easing in case the measures it has already taken fail to boost prices and markets are seeing an announcement of a big QE program, perhaps in the size of €500 billion and perhaps even more. This event will be very closely watched. More: according to details that emerging, a calculation shows that even €2 trillion is possible.
- US Unemployment Claims: Thursday, 13:30. The number of initial claims for unemployment benefits jumped last week by 19,000 to 316,000, from a revised 297,000 in the week before. Economists expected claims to rise moderately to 299,000. The sudden increase is typical for the first full week of the year when holiday workers are fired. The volatility makes it difficult for the government to determine whether the number of applications has truly picked up. The four-week moving average increased to 298,000 last week from 291,250. The number of jobless claims is expected to reach 301,000 this week.
That’s it for the major events this week. Stay tuned for coverage on specific currencies.
*All times are GMT.
- 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
- For the Swiss Franc, see the USD/CHF forecast.
- For the kiwi, see the NZDUSD forecast.