Forex Weekly Outlook – January 4-8 2010
Weekly Forex Forecasts

Forex Weekly Outlook – January 4-8 2010

The first week of 2010 is packed with important events. Starting as early as Sunday with Ben Bernanke and ending with the king of forex – Non-Farm Payrolls. In the middle, there’s a rate decision from Britain, European employment numbers and many important releases from Australia. The holidays are over, and the markets are ready for action. Here are the major events that are expected this week.

In the past holiday weeks we’ve seen false breaks. This week, everyone’s back on the scene, and such events are less likely. Let’s start:

Ben Bernanke

Sunday, January 3rd: Already on Sunday, an important event is expected: Ben Bernanke will speak about the housing bubble, and will probably set the tone for the opening of the year in forex.

Monday, January 4th: Australia’s Commodity Prices are due early on Monday. In Britain, Manufacturing PMI is predicted to rise and help the Pound.

European Sentix Investor Confidence is expected to tick up and push the Euro higher. The big event of the day is American ISM Manufacturing PMI which is predicted to tick up to 54.2 points, after dropping last time.

Tuesday, January 5th: German Unemployment Change surprised economists in previous releases but is expected to rise again, but looking at the past, it will probably drop. CPI Flash Estimate is expected to show that inflation is picking its head in Europe, with a rise of 0.9%.

After strong surprises from new and existing home sales (one good and one bad), American Pending Home Sales are predicted to drop this time by 2.9%. American Factory Orders are predicted to continue the steady positive trend and rise by 0.5% this time.

Wednesday, January 6th: Australian Building Approvals are predicted to leap up this time, after a drop last month that hurt the Euro.

In Britain, Services PMI is predicted to edge higher once again, up to 56.9 points. European Industrial New Orders, that posted a good surprise last month, is predicted to drop this time.

In the US, ADP Non-Farm Employment Change provide a hint towards the Non-Farm Payrolls on Friday. They’re expected to show a loss of 74K jobs, about half of last month’s number, and still in the negative zone.

ISM Non-Manufacturing PMI complements Monday’s similar number. After dropping below the critical 50 mark, it’s predicted to rise back up to 50.9 points this time.

Later in the US, the FOMC Meeting Minutes will shed some more light on the confusing FOMC Statement that eventually pushed the dollar higher.

Kiwi traders should note the Trade Balance release in New Zealand, which is predicted to show a smaller deficit.

Thursday, January 7th: Australian Trade Balance is predicted to show a smaller deficit this time. Retail Sales are predicted to continue the steady growth and show a rise of 0.4%.

Swiss CPI is expected to show another slow month, with a rise of 0.1% in prices.

European Retail Sales are predicted to remain unchanged for a second month in a row. German Factory Orders will probably turn positive, and rise by1.6%.

Mervyn King’s Bank of England will make a rate decision. The British Official Bank Rate is expected to remain unchanged and stay at 0.5%. Also the Quantitative Easing plan, also known as the Asset Purchase Facility isn’t expected to receive additional funding and stay at 200 billion. As the figures aren’t expected to change, the focus will shift to the MPC Rate Statement, which might lay out the policy for 2010. As of Q3, Britain is still in recession.

In Canada, Ivey PMI is predicted to drop from the high levels it reached. This might cool down the loonie.

American Unemployment Claims, which posted neat numbers in the past weeks, are predicted to rise back from 432K to 444K. This will supply another hint for the NFP on Friday.

Friday, January 8th: Swiss Unemployment Rate is expected to tick up once again, and rise to 4.2%. Only a big surprise will shake the Swissy.

German Retail Sales are expected to start rising again, after being unchanged last month. European Unemployment Rate is expected to tick up once again and rise to 9.9%. If it reaches the psychological number of 10%, this will certainly hurt the Euro.

European final GDP for Q3 is predicted to confirm the earlier reading of a 0.4% growth rate. Also note German Industrial Production is predicted to turn positive after dropping last month.

Canadian employment figures have been excellent last month. Good numbers are expected this time as well: Employment Change is predicted to show a rise of 20K and the Unemployment Rate is expected to move from 8.5%. USD/CAD will rock around this release, especially as American NFP is next.

Non-Farm Payrolls are predicted to show almost no job loss. The current consensus of economists shows a loss of 1000 jobs. If the number is a little bit better, and will show a rise in jobs, the dollar will leap. Job losses have been printed in the past two years and a gain in jobs will be excellent news. Here are some notes for Non-Farm Payrolls trading.

Also note the revised number for last month’s number – a loss of 11,000 jobs, which was an excellent surprise. American Unemployment Rate, which dropped from 10.2% to 10% last time, is predicted to tick up to 0.1%. Also here, a drop below 10% will be very meaningful, as this is another psychological barrier.

That’s it for the major events this week. I’ll later post in-depth coverages for specific currencies, in this busy week. In the meantime, check out the EUR/USD 2010 predictions.

Have a great weekend and a happy new year!

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Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.