Forex Weekly Outlook – January 3-7

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A New Year and a fresh start with US ISM Manufacturing PMI, US FOMC Meeting Minutes, American and Canadian Employment Data. Here is an outlook on the market movers on the first week of 2011.

U.S. consumer confidence unexpectedly dropped in December slipping to 52.5 from 54.3 in November following disagreements in Congress, high unemployment rate, stagnant Housing market preventing economic growth. However analysts predict a full economic recovery is right around the corner.

  1. US ISM Manufacturing PMI: Monday, 17:00. The manufacturing sector reached 56.6 in November 0.3% less than October but remaining above the 50 point line indicating expansion in production. The recovery in PMI has been primarily focused on industries like technology and automotives. Given the amount of manufacturing momentum at the moment, there is reason to expect solid manufacturing growth through the first quarter of 2011. A rise to 57.1 is expected now.
  2. US FOMC Meeting Minutes: Tuesday, 21:00. The FOMC became a market mover since it began to disclose policy changes at the end of each meeting.
    The recent FOMC meeting from November 2 and 3 revealed disagreements concerning the second round of stimulus in the $600 billion securities purchase program not convinced whether this action would kick-start inflation or whether it would cause artificial pressure on the already-weak US Dollar. Another key issue is the dual mandate of price stability while simultaneously trying to maximize employment.
  3. American ADP Non-Farm Employment Change: Wednesday, 15:15. U.S. non-farm private employment rose by a seasonally adjusted 93K in November following 82K in October, while analysts expected an increase of 65K.
    Employment in the service-providing sector rose by 79K, employment in the goods-producing sector increased by 14K, construction employment dropped by 3K during November, the smallest decline since June 2007, and manufacturing employment increased by 16K. Another increase of 101K is predicted.
  4. US ISM Non-Manufacturing PMI: Wednesday, 17:00 Growth in the non-manufacturing sector in the U.S. accelerated in November, with the ISM non-manufacturing PMI improving to 55.0 from 54.3 in October.  This market mover is widely followed since it provides a forward-looking barometer of non-manufacturing activity. Analysts predict growth to continue with 55.6 reading.
  5. US Unemployment Claims: Thursday, 15:30. US unemployment claims reached a surprisingly low reading of 388,000, the lowest level in more than two years following 244,000 last week. This figure is much better than 415,000 analysts had expected and could be attributed to the holiday rush period where many firms hold off on firing. Nevertheless this is a real good sign the job market is improving and creating new jobs with a steady downward trend in claims. A small rise is expected  this time with 400, 000 new claims.
  6. Canadian Employment Data: Friday, 14:00. Canadian employment change rose significantly to a seasonally adjusted 15.20K, from 3.00K in the preceding month. Analysts expected a higher increase of 20.2K. While a notable decline in the number of youths participating in the labor market reduced unemployment rate by 0.3% to 7.6%, the lowest since January 2009. Employment Change is predicted to climb by 20.3K.
  7. US Non-Farm Employment Change: Friday, 15:30. Job growth increased a slim 39,000 in November, considerably lower than the 155,000 gain expected following a huge leap of 172K in the prior month. This halt prompted the Unemployment Rate to hike from the previous and expected 9.6% to 9.8%.  A balancing climb of 136,000 is expected now.
  8. US Unemployment Rate: Friday, 15:30.  The unemployment rate in the United States moved up to 9.8% in November following 9.6% in the previous month. Average hourly earnings were essentially unchanged at $22.75. A small decline to 9.7% is predicted.

* All times are GMT.

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Anat Dror – Senior Writer

I conceptualize, design and create multi-lingual websites. Apart from the technical work, my projects usually consist of writing content for these sites in English, French and Hebrew.

In the past, I have built, managed and marketed an e-learning center for language studies, including moderating a live community of students.

I’ve also worked as a community organizer