Forex Crunch Forex Weekly Outlook – December 14-18 2009 |
- Forex Weekly Outlook – December 14-18 2009
- Forex Links for the Weekend
- EUR/USD Hit By Greece, Spain and now America
| Forex Weekly Outlook – December 14-18 2009 Posted: 12 Dec 2009 02:00 AM PST
The upcoming week in forex trading has the FOMC meeting in the limelight. In addition, British employment figures, Australian GDP and inflation data from all over the world will dominate the scene, in the last full trading week of the year. Here’s a review of the major events in the upcoming week. American Non-Farm Payrolls, that made a big surprise on December 4th, continue to overshadow the markets, as the dollar continues to strengthen. But this strength isn’t equal against all currencies. Let’s see what’s on the menu:
Monday, December 14th: Japanese Tankan Manufacturing Index provides a strong start for the week. It’s expected to rise but stay negative. British Rightmove HPI will continue in the early hours. The British housing sector is getting better, and support a fragile hope to get out of recession. Swiss PPI is predicted to turn positive, but still far from inflation. European Industrial Production is predicted to drop this time, while the Employment Change, a late figure, is predicted to remain unchanged. Tuesday, December 15th: Australian Monetary Policy Meeting Minutes will supply hints about the next RBA meeting – it looks like another rate hike is underway, especially with the improving job market in Australia. Swiss Industrial Production is expected to rise again, but in a modest pace. German ZEW Economic Sentiment is very important for the Euro. It’s expected to drop this time. British prices are expected to rise, with CPI at 1.8% (annualized). This should help the Pound. Also the RPI, which measures retail prices, is expected to rise after dropping for a long time. American PPI is predicted to rise by 0.8% – a higher rise might help bring a rate hike. TIC Long-Term Purchases, which represent cash flow, are expected to rise significantly and help the dollar. Also in the US: Empire State Manufacturing Index, Capacity Utilization Rate and Industrial Production are released, with expected improvements on all fronts. Wednesday, December 16th: Australian GDP is expected to show a quarterly rise of 0.4%, less than last month’s 0.6%. This will be the third straight quarter of growth. Australia was never in recession. In Britain, important employment figures are due: the Claimant Count Change – the earliest of employment numbers, is expected to rise once again to 14.2, after last month’s surprise. The Unemployment Rate, a delayed figure, is expected to rise from 7.8% to 8%. These releases will shake the Pound. In Europe, initial PMI reports will be released: first in France, then in Germany and finally for the whole continent. Most numbers are expected to advance. European CPI is expected to remain unchanged at 0.6%, and so is Core CPI at 1.2%. Stronger figures are necessary to push EUR/USD higher, after being hit by many figures. On the other side of the Atlantic, American CPI is rpedicted to rise by 0.4%, while Core CPI is predicted to remain stable at 0.2%. Two housing figures are published as well: Building Permits and Housing Starts, which are both predicted to get close to 600K. Also note the Current Account, which is predicted to show a bigger deficit. The more important event comes in the evening: The Federal Reserve is expected to leave the interest rate unchanged once again, despite the excellent Non-Farm Payrolls. Bernanke downplayed this option. While the Federal Funds Rate won’t move from 0.25%, the FOMC Statement will be of interest to traders, as future plans about the rate are expected to be heard. Thursday, December 17th: Kiwi traders will be interested in the NBNZ Business Confidence which will be published early in the day. British Retail Sales are predicted to rise again, this time by 0.5%. CBI Realized Sales are also expected to advance. Canadian CPI will probably turn positive and rise. Core CPI is expected to stay stable at 0.1%. American Unemployment Claims retreated last week, and are predicted to edge up this time. Also note the Philly Fed Manufacturing Index which is expected to drop. Friday, December 18th: The rate decision in Japan isn’t expected to bring a change in the Overnight Call Rate, but the accompanying Monetary Policy Statement may lay out the policy for intervention, after the emergency BOJ meeting that was held about two weeks ago. German Ifo Business Climate is another important survey for the continent, and it’s expected to edge up once again. British Public Sector Net Borrowing is expected to double to 23.1 billion. This comes on the background of Alistair Darling’s problematic budget. That’s it for the major events for this week. I’ll later post specific currency coverages. Stay tuned! |
| Posted: 11 Dec 2009 02:00 PM PST
Here are some interesting forex-related reads for the weekend, all with a rather large scope and in a variety of issues:
One late addition: another link to Michael Greenberg’s blog – it was written by me: About the smarter carry trade. That’s it for now. Have a great weekend! |
| EUR/USD Hit By Greece, Spain and now America Posted: 11 Dec 2009 06:04 AM PST
EUR/USD is having a bad week. The blow it got from American Non-Farm Payrolls continued with internal problems in Europe, and American retail sales send it further down. It may be getting close to a breakout.
Update 15:00 GMT: American Consumer Sentiment was also better than expected: 73.4 points instead of 68.6. EUR/USD is already down to 1.4650, and is quickly approaching the support line mentioned ahead in the article. American Retail Sales came out better than expected – a rise of 1.3%, more than double the early expectations that talked about a rise of 0.6%. Also Core Retail Sales, no less important, rose by 1.2%, exceeding early expectations of a 0.5% gain. American Retail sales move the forex markets, especially on Friday, near the close of the market. Last week at the same time, American Non-Farm Payrolls were far better than expected and sent the dollar up across the board. The risk factor was out of the game, and the dollar finally gained on good data. EUR/USD fell from 1.4770 to 1.4700 after the release. EUR/USD is one of the biggest movers on the dollar’s mood. The fall stopped above 1.48, which was the bottom border of the previous range. But this week, EUR/USD also suffered from internal problems. There is high uncertainty if Greece can pay its debt. The credit crunch isn’t isolated to Dubai. Bad news also came from the other flank of the continent: Spain got a severe credit downgrade. While Germany and sometimes France receive most of the focus in the continent, they are not alone in the Euro zone. While Germany and France are slowly recovering, other countries, such as Spain, Greece and also Ireland, still have their problems, and this weighs on the Euro as well. Where next? As I’ve mentioned in the weekly EUR/USD forecast, the next support line is 1.4626, which was a swing low at the beginning of November. The pair already reached a low of 1.4666 earlier this week. Below that line, the range of 1.4444 to 1.4480 lies. EUR/USD broke the strong 1.4444 resistance line at the beginning of September, and never dipped below 1.4480 since then. Check out Casey Stubbs’ analysis as well. |
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