Fundamental Analysis by Admiral Markets

[Admiral Markets]

Another Busy Week For The Forex Market Players



Deadly attacks in Paris also affected the global markets on Friday as participants rushed to secure their financial assets and sought USD as a stronger one to buy; however, the said news failed to provide positive weekly closing to the US Dollar Index (I.USDX) as slower than expected rise in US Retail Sales and another negative reading by the monthly PPI number kept restricting investor sentiment regarding December rate hike and resulted a negative weekly closing by the greenback gauge. The Euro remained mostly fragile as downbeat GDP and the geo-political crisis, coupled with another dovish remark by the ECB President, in his testimony, kept forcing the Euro players towards exiting the regional currency; though, uncertainty in the market helped limiting major downside. Further, the GBP was a clear winner during last week as the Unemployment Rate plunged to the lowest levels since July 2008 while the JPY gained considerably against majority of its counterparts with the support gained from safe-haven demand. Moreover, the AUD also strengthened across the board with upbeat job numbers while the NZD and CAD were mostly in negative territory with Chinese pessimism and Crude price decline hurting these commodity currencies.

During the current week, Inflation numbers from US, UK and Canada are likely to steal the lime-light while the FOMC meeting minutes and the BoJ monetary policy meeting will be crucial to watch. Also, UK Retail Sales, EU & German ZEW Economic Sentiment and US Manufacturing indices, coupled with housing market numbers, are some other events that could continue fueling Forex volatility in the upcoming weekdays.

US CPI And FOMC Meeting Minutes To Help Portray USD Trend

Following strong jobs data during the month of October, speculations concerning Fed Rate hike in the month of December again secured momentum; however, monthly Inflation number, another indicator that Fed wants to rein before announcing rate hike, could be of utmost importance while forecasting the USD strength. Moreover, minutes of the October meeting, wherein most FOMC members favored rate lift-off during 2015, can also help putting the bets on December rate hike and in-turn determining the greenback strength.



Unlike the labor market reports, the US inflation have been worrisome for the Federal Reserve policymakers as the figure recently dipped in the negative territory, with -0.2% mark, against the central bank's target of +2.0%; Though, the Core reading was in favor and may give rise to expectations that the US economy is slowly witnessing price increases. As said, the September month CPI reading plunged negative with -0.2% m-o-m, and on y-o-y as well, while the monthly reading of Core CPI marked +0.2% reading against the yearly figure near to +2.0%.

Inflation figures for the month of October, scheduled for Wednesday release, are expected to mark +0.2% CPI and +0.2% Core-CPI. Given the inflation numbers match their respective consensus, present speculations concerning December rate hike get another boost, helping the US Dollar to continue on its medium-term upward trajectory.

October FOMC meeting minutes, up for release on Wednesday, becomes another important indicator to determine the chances of first interest rate lift-off by the Federal Reserve. As the meeting wasn't followed by the Fed Chair's press conference, that generally clear doubts about future monetary policy, market participants are likely to look for the discussion points that might pave way for December rate-hike. An optimistic tone in most of the FOMC members' opinion strengthens chances of USD up-move.

Other than the Inflation and minutes, US manufacturing indices, namely, Empire State Manufacturing Index and Philly Fed Manufacturing Index, scheduled for Monday and Thursday respectively, coupled with government reports on Building Permits and Housing Starts for the month of October, scheduled for release on Wednesday, are another set of numbers that could help foresee intermediate greenback moves. Both the Manufacturing indices are expected to mark an improvement in US manufacturing activities as Empire State number may print -5.3 mark against -11.4 prior, the lowest in four months, while the Philly number is likely reversing its prior decline of -4.5 with +0.1 mark. However, housing market numbers are likely creating confusion with Building Permits expected to mark 1.15M against upwardly revised 1.11M prior and the Housing Starts forecast favoring 1.16M print as compared to 1.21M previous reading. As major numbers are likely favoring optimistic scenario, actual prints marking upbeat readings could become additional positive point for the greenback.

ZEW Economic Sentiment Could Clear EUR Traders' Doubts

Recent geo-political crisis, that badly hit Paris, added one more reason for the European Central Bank (ECB) to consider adding monetary stimulus in its kitty; though, final reading of CPI, published on Monday, reversed its prior -0.1% decline with +0.1% mark and let the market players guess of what could come in the December meeting of region's central bank. However, ZEW Economic Sentimentfor Germany and EU, scheduled for release on Tuesday, can help expect intermediate EUR moves. Forecasts suggest that the German economic sentiment is likely to improve from its year's low marked in prior release, at 1.9 to 6.7, while the EU ZEW number may mark three months' high of 35.2 as against its 30.1 previous reading.

Even if immediate data points favor Euro short-covering, if match the forecasts, macro pessimism, triggered by recent attacks and hints of further monetary easing by the ECB President, can continue hurting the regional currency.

GBP Trend To Rely On UK Retail Sales And CPI

Off-late the BoE has been flashing dovish messages; though, continuous improvements in labor market numbers keep favoring stronger GBP that alternatively hurt the UK economy's export income and forces the central bank towards monetary policy easing. However, monthly reading of CPI and Retail Sales, that contributes major part of GDP, becomes important to plot near-term GBP trend.

UK CPI, up for release on Tuesday, is likely to continue marking negative numbers, this time with the same -0.1% marked as earlier, while the Retail Sales may contract highest since April 2015, with -0.4% against +1.9% prior. Should the Inflation number continue causing problem to the Bank of England (BoE) and the major source of GDP, the Retail Sales, plunges negative, chances of prolonged lose monetary policy by the BoE becomes brighter that in-turn can drag down the UK currency.

BoJ And Canadian Detail Are The Rest To Fuel Forex Volatility

With the Monday's Japanese Q3 2015 Prelim GDP marking another negative reading, a theoretical recession, Bank of Japan monetary policy decision announcement, scheduled on Thursday, followed by the BoJ Governor's press conference, would be this week's key developments coming out from Japan. Considering recent declines in major Japanese economic indicators, namely, Core CPI, household spending, vehicle production, retail sales and imports, the central bank is more likely to spread dovish remarks in its statement. However, comments from Governor Kuroda will be closely scrutinized for evaluating central bank's readiness to introduce further stimulus measures. Even if the BoJ isn't expected to alter its current monetary policy, revision in the economic outlook and/or negative comments from the Governor could provide noticeable damages to the Japanese Yen (JPY); though, macro pessimism, inflicted from China and Paris in recent times, may limit further downside of the Japanese currency due to its safe-haven status.

Plunging Crude prices, Canada's main export, coupled with Chinese negativity, kept hurting the Canadian Dollar (CAD) in recent times. However, monthly reading of Manufacturing Sales, CPI and Retail Sales are likely to provide further guidance on CAD trend. While the Manufacturing Sales,scheduled for Monday, is likely to reverse its prior -0.2% decline with +0.3% mark, the Retail Salesand CPI, to be released on Friday, may disappoint CAD traders with downbeat readings and can continue hurting the Loonie, as it is nicknamed. As against mixed economics, that supports a short-covering rally in CAD, extended downside in the Crude prices may continue dragging down the Canadian Dollar.



“Original analysis is provided by Admiral Markets”

 

[Admiral Markets]

Can USD Extend Its Up-move?



Although recently released FOMC meeting minutes triggered doubts that raising Fed rate too early could harm the US economy, the US Dollar Index (I.USDX) secured positive weekly closing as improvement in Inflation and Jobless numbers, coupled with hawkish tone of some FOMC members, during their public appearances, kept favoring December rate hike speculations. Also, the ECB President, during his testimony, provided strong support to the central bank's readiness in adopting further monetary easing, giving additional harm to the Euro and counter strength to the US Dollar. Moving on, the GBP weakened against majority of its counterparts on negative CPI and higher than expected drop in Retail Sales while the AUD strengthened considerably as RBA, in its recent monetary policy meeting minutes, revealed that it doesn't see any need to cut the interest rate in near-future and a rise in New-Zealand PPI and Retail Sales helped the NZD gain. Moreover, the JPY remained sideways as the BoJ refrained from discussing further monetary easing even if the country's GDP number signaled recessionary pressure.

Looking into the current holiday shortened week, there are fewer but meaningful economic events/releases scheduled for publish that could provide hints to determine near-term market moves. Amongst them, surprise announcement by the Federal Reserve, US Q3 2015 Prelim GDP, Consumer Confidence and Durable Goods Orders become helpful in forecasting the US Dollar trend while German Ifo Business Climate Index and the second estimate of UK Q3 2015 GDP are some other numbers that can continue fueling the Forex volatility.

Fed Announcement And US GDP To Get Market's Attention
While recently released FOMC meeting minute couldn't offer much insight on December rate hike speculations, overall market sentiment, backed by improvement in inflation and job numbers, still favor chances that the Federal Reserve would lift its benchmark interest rate for the first time since 2006. However, this week's wildcard announcement by the Fed and a second estimate of the GDP release would provide clarity on whether the US central bank can lift the rate during its December meeting or there are still some places that could stop it from practicing such a move.



With an uptick in recent Inflation marks, coupled with optimistic labor market details, improvement inGDP number, scheduled for release on Tuesday, can become good news for the USD players. Initial estimation of the Q3 2015 GDP mentioned that the US economy expanded at 1.5% as compared to the previous quarter growth of 3.7%; however, consensus relating to the second estimate favors an uptick in the economic projection to 2.0% GDP growth and may help the central bank in announcing interest rate hike during its December meeting.

The Federal Reserve is scheduled to hold a closed meeting of the Federal Reserve System's Board of Governors on Monday where the board may review and determine the advance and discount rates to be charged by the Federal Reserve Banks. Even if the final announcement is to be made after the meeting and is less likely to deliver any surprises in case of monetary policy change, the central bank would communicate signals relating to its future monetary policy action and may help putting bets on December rate hike.

Recent improvements in US economic indicators could find another support from the upbeat GDP, helping the US Federal Reserve to announce interest rate hike in its much awaited December meeting; however, an indication by the central bank, via its Monday announcement, may become more important to portray medium-term USD moves.

In addition to the top-tier announcements, monthly releases of Existing Home Sales, to be released on Monday, CB Consumer Confidence, scheduled for Tuesday, together with Durable Goods Ordersand New Home Sales, up for Wednesday release, are some other economic details that could help determine near-term USD moves. While Monday's Existing Home Sales may print lesser than prior 5.55M with 5.39M mark, the New Home Sales is likely to surpass its previous 468K number with 500K mark. Moreover, the CB Consumer Confidence is expected to improve from its last month's 97.6 to 99.3 and the consensus relating to Durable Goods Orders indicate a reversal from its earlier decline of -1.2% with +1.6% growth together with +0.5% expansion in Core Durable Goods Orders against -0.3% prior release. With majority of these second-tier releases expected to print upbeat numbers, chances of the near-term USD advance become brighter.

German Business Climate & UK GDP To Portray EUR And GBP Moves Respectively
Even if Monday's Flash PMI releases from France, Germany and EU helped pulling back the regional currency a bit from its downside, overall sentiment for the Euro keep remaining bearish after the recently released EU details pushed the ECB President to favor need of additional monetary easing in his testimony last week. However, German Ifo Business Climate, scheduled for Tuesday, becomes important to determine the strength of Europe's largest economy and the chances of additional monetary easing announcement during December meeting. The index is likely printing improvement in German business conditions with 108.3 mark compared to previously released 108.2. Should the business sentiment keep improving, chances of immediate EUR strength can't be negated; however, the overall EUR trend remains weak and is less likely to alter unless upbeat positive readings from major EU numbers which are absent during the week.

Weaker Inflation and Retail Sales, coupled with recently dovish BoE, keep favoring further GBP downside; however, second estimation of the Q3 2015 GDP, scheduled for release on Friday, can become an important indicator to forecast near-term GBP moves. The second estimation is likely to confirm the initial release of 0.5% growth number as compared to 0.7% marked during Q1. Better than expected print of GDP can remove recent pessimism surrounding GBP and can help it advance against majority of its counterparts.

New-Zealand Trade Balance and Japanese Details Are the Rest To Observe
New-Zealand Trade Balance, to be published on Wednesday, Japanese Household Spending, CPIand Unemployment Rate, to be published on Friday, are some other details, other than the mentioned above, to help making Forex market alive.

Having witnessed considerable downside in dairy prices that triggered NZD decline, coupled with Chinese pessimism, the Trade Balance details of commodity dependent economy is expected to print another positive mark for the New-Zealand Dollar. Trade Deficit is likely to shrank to -1000M against -1222M and can help the NZD continue its recent advance; though, broader weakness in commodity markets could continue limiting extensive rise by the Kiwi, as it is nicknamed.

Even if the Bank of Japan recently refrained from signaling further monetary easing, monthly releases relating to Inflation, Household Spending and Unemployment Rate become important for the Japanese central bank in determining future monetary actions. While the Household Spending is expected to reverse prior declines of -0.4% with 0.0% mark, Inflation numbers are likely to keep remaining in negative region and may continue forcing the BoJ for additional monetary easing.Continuous deflation and a weaker household spending may force the Japanese central bank towards further monetary easing and JPY downside; however, safe-haven demand of the Japanese Yen may limit major decline.

“Original analysis is provided by Admiral Markets”

 

[Admiral Markets]

All Eyes On ECB & NFP

Neglecting the pessimism triggered by US consumer confidence, which dropped to its lowest level since Nov. 2014, and data on personal spending/consumption, together with downbeat housing market details, the US Dollar Index (I.USDX) managed to mark another positive weekly closing as higher than expected GDP print, positive Durable Goods Orders and overall optimism about the December rate hike helped the USD bulls. On the contrary, the Euro couldn't enjoy positive PMI news as market players remained cautious ahead of this week's crucial ECB meeting that would determine whether the European Central Bank cut its interest rate or extend/expand the QE or practices both these options to counter deflationary crisis. Moving on, the GBP remained negative even if the second estimate of Q3 2015 GDP matched consensus as Consumer Confidence plunged to the lowest since January while the JPY gained against some of its counterparts due to rising safe haven demand. Moreover, commodity currencies, namely AUD, CAD and NZD, closed again in the red region due to Chinese equities' plunge during weekend while Crude and Gold prices extended their downsides as supply glut worries ahead of this week's OPEC meeting kept damaging Crude prices while rising dollar favored yellow metal bears.

As the current week contains start of crucial December month, monetary policy meeting by the ECB and the monthly release of US NFP are likely to gain major market attention. Moreover, headline PMI release from UK and China, EU Flash CPI, monetary policy meetings by the RBA and BoC, coupled with GDP releases from Australia, Canada and Switzerland, are some other details that could maintain the information flow making market players sit on the edge throughout this week.

NFP To Portray Chances Of December Rate Hike

Being the final reading ahead of Federal Reserve's December monetary policy meeting, wherein most market players expect a quarter percent rate hike, the first since 2006, by the US central bank, US job numbers revealing labor market situation during the month of November would gain major attention.

With the labor market strength being a key determinant in forming US Fed monetary policy, continuous improvement by Friday's job numbers, namely Non-farm Payrolls (NFP), Unemployment Rate and Average Earnings, could propel chances of December rate hike that in-turn would provide considerable across the board strength to the greenback. The NFP is likely to witness a pullback from its five month highs marked in October, by printing 201K from 271K prior, while the Unemployment rate is expected to remain unchanged at the lowest since May 2008. Further, the Average Earningsalso signals a bit of weakness in earning growth to 0.2% from 0.4% October mark.

Even if the present consensus relating to job reports favors a bit of USD pullback, chances of the December rate hike are less likely to be damaged as recent figures are already quite impressive with NFP staying above +200K and seven years' low Unemployment Rate. Moreover, upbeat actual figures, surpassing the consensus, would provide further strength to the December rate hike calls and may propel the US Dollar against majority of its counterparts.

Other than the labor market numbers, figures relating to US manufacturing activity like Chicago PMI, ISM Manufacturing PMI and Factory Orders, coupled with Pending Home Sales, ADP Non-Farm Employment Change and Fed Chair's Testimony, are some important details that could keep flashing important signals to help determine USD moves.

While Monday's Chicago PMI and Tuesday's ISM Manufacturing PMI signal contrasting views by expectations of marking 54.3 versus 56.2 prior and 50.6 against 50.1 previous number respectively, the Factory Orders, scheduled for Thursday, may reverse prior two months' negative prints with +1.2% gain. Moreover, the Pending Home Sales, also scheduled for Monday, becomes another US indicator to reverse prior months' negative marks with 1.6% gains versus -2.3% contraction marked during September. Moving on, the ADP Non-Farm Employment Change, considered to be early signals for Friday's job report, up for Wednesday publish, bears an optimistic consensus of testing 191K mark against 182K prior while the Testimony by the Federal Reserve Chair, to be published on Thursday, could also hint something relating to US economic strength and the Fed's view of monetary policy, providing help to forecast December rate hike.

Considering the forecasts, major US economics are expected to reveal continuous strength of world's largest economy, favoring December rate hike, the US Dollar is more likely to extend its northward trajectory. Should these numbers depict pessimistic marks, the USD may only witness a pullback and then carry on the up-move unless there are drastic negatives by all the indicators.

ECB Meeting To Determine Future Moves Of The EUR

In addition to the Friday's US labor market numbers, monetary policy meeting by the European central Bank (ECB), on Thursday, becomes important indicator that would direct medium-term moves of the regional currency, Euro. Moreover, monthly release of CPI Flash Estimate, scheduled for Wednesday, may also provide meaningful information to forecast Thursday's central bank actions.

Looking at the market forecasts, Flash estimate of Inflation is likely to surpass its upwardly revised +0.1% mark with +0.2% number and could help ECB avoid further monetary easing while recent disappointments via Inflation and growth numbers have favored the market expectations of fresh monetary policy easing announcements by the ECB wherein the central bank may either cut their benchmark interest rate or extend/expand its QE. Some extremists also expect that the regional central bank can even go a step further and adopt both these measures to quickly come out of current pessimism. The monetary policy decision will be followed by press conference of the ECB President, Mario Draghi, where a prepared statement on the new macro-economic projections, that influence the central bank's monetary policy decision, will be read.

Although market seems to have already priced-in further monetary easing by the ECB, quantum of easing and Draghi's comments would gain much attention. If the central bank disappoints market, together with the support from improvement in CPI, short-covering rally for the EUR can't be denied.

Headline UK PMIs Can Help Forecast Near-Term GBP Trend

Starting from Tuesday, headline PMIs for the UK economy, concerning Manufacturing, Construction and the most important, Services sectors, are scheduled for publish during the current week. While the Tuesday's Manufacturing PMI and Wednesday's Construction PMI indicate a bit of weakness as compared to previous levels, with the Manufacturing PMI expected to mark 53.7 against 55.5 prior and the Construction PMI consensus favor a 58.4 print versus 58.8 previous mark, the Services PMI, on Thursday, is expected test the three month high with 55.1 print against 54.9 prior. As the Services PMI, core to the UK economy, favors continuous strength, downbeat readings from Manufacturing and Construction sectors may have lesser strength to damage the GBP. However, pessimistic readings from all these numbers could provide additional weakness into the UK currency.

Chinese Manufacturing PMIs, RBA and Australian GDP Would Direct AUD Trades

Chinese official Manufacturing PMI and the Caixin Manufacturing PMI won't only reveal the industrial strength of world's largest manufacturing economy, these headline PMIs would also help forecast the AUD moves as the China is largest consumer for Australia.

On Tuesday, the official Chinese Manufacturing PMI is expected to mark another below 50.00 number, favoring contraction with 49.9 against 49.8 prior while the same PMI from Caixin is likely to remain at its previous 48.3 number. Both these important indicators are well in the contraction region and unless a positive mark above 50.00, current pessimism surrounding China is likely to continue dragging down the commodity basket and commodity currencies, including AUD.

Monetary policy meeting by the Reserve Bank of Australia (RBA), scheduled for Tuesday, followed by the Q3 2015 Australian GDP, on Wednesday, Trade Balance on Thursday and Friday's Retail Sales, are some of the top Australian events/announcements that would direct near-term AUD moves.

The RBA isn't expected to alter its current monetary policy and the monthly Retail Sales are likely to grow with the same pace of 0.4%, together with larger Trade deficit of -2.61B against -2.32B prior. Moreover, the GDP is expected to show quarterly growth of 0.7% over 0.2% recorded in the previous quarter. Although, improvement in GDP can help AUD, pessimistic details from China and overall decline in commodity basket could continue dragging down the Australian Dollar during its near-term trading.

Important Details From Canada And Switzerland

Alike its Australian counterpart, the Canadian Dollar is also likely to be affected by its central bank meeting and the GDP announcement while the Swiss GDP and Employment details could help determine near-term CHF trend.

Monthly release of Canadian GDP, scheduled for Tuesday, is likely to maintain its 0.1% growth rate unchanged for the month of September and the Bank of Canada (BoC) isn't expected to announce any monetary policy change during its Wednesday's meeting. However, Crude prices and OPEC meeting, scheduled during the week, would become important for the Loonie, as it is nicknamed.Should the Canadian GDP plunges into negative territory and the OPEC members keep negating the need of production cuts to balance the Crude prices, chances of further CAD declines can't be denied.

Tuesday becomes an important day for CHF as quarterly releases of Q3 2015 Swiss GDP andEmployment Level, coupled with monthly Retail Sales, are scheduled for publish during the same day. While the GDP is expected to continue growing with the same pace of 0.2% and the Employment Level is also likely to mark 4.24M number, improvement in monthly Retail Sales, to the highest levels since June 2015, to +0.4% against +0.2% prior, could help the Swiss Franc (CHF) remove some of its recent losses.



“Original analysis is provided by Admiral Markets”

 

[Admiral Markets]

Fewer Economic Releases To Fuel This Week’s Forex Moves



Following the ECB's disappointing mandate of a 10 basis point cut in the deposit rate and the QE extension, to March 2017 from earlier formal deadline of September 2016, the Euro appreciated heavily against majority of its counterparts and alternatively damaged the US Dollar. The greenback, on the other hand, failed to enjoy the benefits of higher than expected NFP as short-covering rally by the EUR and comments from the Fed Chair, that reduced importance of December job numbers, forced USD bulls to liquidate some of their recent gains, resulting into a big weekly decline by the US Dollar Index (I.USDX). Further, the JPY witnessed downside as some BoJ policy makers doubted ability of the central bank's monetary policy measures to reach the inflation target and suggested to remove the date limit for the same while the GBP also remained weaker with downbeat Manufacturing and Construction PMI. Moving on, the commodity currencies were kept trailing in red due to global commodity pessimism, mainly triggered by China, while the crude prices plunged as OPEC refrained from production cuts in its meeting, favoring additional supply glut.

Looking forward to the current week, which started with another USD up-move, there are fewer economic releases to fuel the forex volatility wherein there aren't any major releases from the Euro-zone. However, monetary policy meetings by the RBNZ, SNB and BoE, Australian job numbers, coupled with US Retail Sales, PPI and UoM Consumer Sentiment, are some of the important releases to govern this week's trading. Moreover, Japanese GDP, Chinese Trade Balance and Industrial Production and the UK Manufacturing Production are additional data points that could direct this week's forex moves.

Consumer Centric Details May Help Determine Near-Term USD Trend
After tepid reaction to the November job numbers, market players are less likely to give more importance to any other matters than the next week's FOMC meeting; however, monthly releases of Retail Sales, PPI and Preliminary UoM Consumer Sentiment, scheduled for Friday, may provide intermediate moves to the US Dollar.

Forecasts show that all of the scheduled details are likely to print upbeat numbers, with Retail Sales expected to mark three months' high of 0.2% and the Core reading surpassing previous 0.2% with 0.3% while the Consumer Sentiment Index by the University of Michigan may mark an improvement from its downwardly revised prior of 91.3 to 92.3.

Gradual improvement in consumer-centric details can continue favoring the chances of first in a decade interest rate hike during the next week's critical FOMC meeting, indicating a reimbursement of recent USD decline.

AUD Traders Should Watch Australian Job Numbers & Chinese Data-Points
Recently upbeat Australian labor market details have helped the Reserve Bank of Australia (RBA) to avoid further interest rate cuts and hold the monetary policy intact for more than six months; however, pessimism from Australia's largest consumer, China, keep threatening the central bank policy makers. Hence, this week's Australian job numbers and some of the headline Chinese details, like Trade Balance, Inflation and Industrial Production, become important for the AUD traders to Watch.

AU Job Numbers



As discussed, recent job details from Australia signal robust growth in labor market where the Unemployment is heading south to the lowest in more than a year by printing 5.9% mark while the Employment Change rallied to the record high of 58.6K during its October reading. Consensus relating to the actual releases, scheduled for Thursday, shows a downbeat mark as the Unemployment Rate is likely increasing to 6.0% and the Employment Change expected to register -10.0K print. Other than the headline job numbers, Australian indices revealing Business and Consumer Sentiments, scheduled for release on Tuesday and Wednesday respectively, are also likely to continue on their south-run due to Chinese weakness.

Being the world's largest industrial player, Chinese economics have multiple impacts. The dragon nation, which has been struggling to counter slowing growth and inflation off-late, is scheduled to release monthly details of Trade Balance, CPI and Industrial Production during the current week. Tuesday's Trade Balance is expected to show higher trade surplus of 395B against 393B prior and the forecast relating to Wednesday's CPI show 1.4% versus 1.3% previous mark. Moreover, Industrial Production, the core to Chinese economy, is also expected to have expanded by 5.7% as compared to its previous 5.6% reading.

Even if downbeat job numbers favor interest rate cut by the RBA, and in-turn the AUD downside, improvement in Chinese economics may help the Aussie, as it is nicknamed to wipe some of the losses.

BoE Can Guide GBP Traders
Off-late UK economics have failed to print positive numbers, indicating a delayed interest rate hike by the second promising contestant, the BoE, which supports monetary policy tightening, except the Fed; however, the central bank kept refraining from committing the weakness and hence making GBP traders worried near all the BoE outcomes. The Bank of England (BoE), during its Thursday's monetary policy meeting, is neither expected alter the current monetary policy nor does any more policymaker, except one, is expected to vote for a bank rate change.

Although, the UK central bank isn't expected to alter its monetary policy comments from the statement, more likely bearish, may reveal future actions by the BoE and are important to determine near-term GBP moves.

In addition to central bank meeting, UK Manufacturing Production, scheduled for Tuesday release, becomes another important indicator to forecast GBP trend. The monthly reading is expected to suggest a contraction in UK manufacturing activity by -0.1% against +0.8% prior and can favor further downside by the UK currency.

RBNZ, SNB And Japanese GDP Are Remaining Readings To Consider This Week
Other than the BoE, Reserve Bank of New-Zealand (RBNZ) and Swiss National Bank (SNB) are also scheduled to announce their monetary policy decisions on Thursday while Tuesday's Final reading of Q3 2015 Japanese GDP is an indicator to help analyze upcoming BoJ actions.

While the Japanese GDP is expected to mark an uptick from its initial -0.2% forecast with +0.1% print, helping the JPY rise, and the SNB isn't expected to alter its current monetary policy, with continued CHF downside, the RBNZ is likely to practice an interest rate cut after holding the monetary policy intact during October meeting as drop in the dairy products favor the need of additional monetary measures by the New-Zealand economy.

Should the Japanese GDP dips below its initial estimations, chances of BoJ announcing additional monetary policy easing measures can't be denied, which in-turn favors further JPY downside while dovish comments by the SNB may accelerate CHF decline. Moreover, pessimistic outlook by the RBNZ Governor, during accompanied with an interest rate cut, would favor future rate cuts and thus opening room for resumption of the downward trajectory for the NZD.

“Original analysis is provided by Admiral Markets”

 

[Admiral Markets]

Forex Market Awaits FOMC Outcome




Even after upbeat prints of US Retail Sales & PPI numbers, the US Dollar Index (I.USDX) headed for the second weekly decline ahead of the crucial FOMC meeting as market players remained worried that weakness in global economy, led by renewed sell-off in crude oil, could force the Fed to adopt slow pace of monetary tightening in 2016 after the first in almost a decade interest rate lift-off takes place during the current week. The Euro region currency, even with no major economic support, extended its short-covering rally triggered by previous week's ECB disappointment while the GBP remained sluggish with a greater decline in Manufacturing Production and neutral BoE tone. Moving on, the JPY rallied heavily against majority of its counterparts after market participants run for safe-havens ahead of the FOMC and the commodity currencies, namely NZD, AUD and CAD, extended their downside as Crude prices kept declining with EIA forecast favoring extended supply glut and China remained under pressure even after registering five month high Industrial Production.

As the world is near to witness much awaited interest rate hike by the US Federal Reserve, at the end of two-day monetary policy meeting on Wednesday, all eyes are stuck on the FOMC outcome which will govern this week's forex moves. Moreover, Inflation numbers by the US, UK, Europe and Canada, coupled with UK Retail Sales, job details and monetary policy meeting by the Bank of Japan (BoJ) are some other releases that could continue fueling the Forex volatility.

FOMC Would Determine The USD Fate

Having witnesses sustained improvement in labor market and slew of upbeat economic releases, Federal Reserve policy makers seem all set to trigger the first interest rate hike since 2006 during its Wednesday's FOMC outcome which becomes the biggest event of the week and could determine the fate of US Dollar. Wednesday's Fed outcome is also accompanied by the quarterly economic projections by the US central bank and would be followed by press conference of the Federal Reserve Chair, Janet Yellen, which increases the importance of the event.

Source: US Federal Reserve​

Although, the US central bank is expected to trigger a 0.25% hike in its benchmark Fed funds rate, the news seems almost priced-in during last three months and market players are more likely to concentrate on how quickly the FOMC could normalize monetary policy going forward from the current state of near zero interest rate. During its September release of quarterly economic forecasts, the Fed lowered down the longer-term growth and Inflation forecasts and the interest rate projections also signaled a slower tightening in future. Moreover, the FOMC members, including the Fed Chair, have been saying that the upcoming interest rate hikes, following the December ones, would be data dependant and will gradual. Hence, it wouldn't be sufficient enough to only witness the interest rate hike but all the details of this particular event in order to determine the medium-term moves of the US Dollar.

With the interest rate hike almost priced-in, guidance on the Fed's future moves could determine the strength of the US Dollar going forward and a slower normalizing to the monetary policy may drag the greenback down. Moreover, tone of the Fed Chair and the central bank's economic projections would provide further information to forecast medium-term USD moves.

In addition to the Wednesday's FOMC, monthly releases of US CPI, Empire State Manufacturing Index, Building Permits, Housing Starts and Philly Fed Manufacturing Index are some other economics that could help foresee immediate trend of the greenback.

While Tuesday's CPI is more likely to disappoint USD bulls with 0.0% mark versus 0.2% prior, theCore-CPI reading is likely to remain unchanged at 0.2% and the Empire State Manufacturing Index, scheduled for Tuesday release, may signal slower contraction in manufacturing with -5.7 mark against -10.7 previous reading. Moving on, housing market numbers, namely, Building Permits & Housing Starts, are scheduled for publish on Wednesday and are less likely to trigger much of the US Dollar move ahead of the FOMC as the Building Permits are expected to remain unchanged at upwardly revised 1.16M and the Housing Starts could mark 1.14M against 1.06M prior. Further, Thursday'sPhilly Fed Manufacturing Index is likely to replicate the Empire State reading by indicating improvement in US manufacturing with 2.1 number as compared to prior 1.9 mark.

ZEW Economic Sentiment, PMIs and CPI To Help Forecast EUR Moves

Considering recent recovery of the regional currency, EUR, without major economic support, numbers relating to the EU & German ZEW Economic Sentiment, Flash Manufacturing & Services PMIs and Final reading of November CPI, could provide meaningful information to forecast near-term Euro trend.

EU & German ZEW Economic Sentiment, scheduled for Tuesday, favors that both the indices relating to EU and Germany are likely to print four month highs with 34.4 & 15.2 mark against 28.3 and 10.4 respectively, favoring a bit more of the Euro rise. However, numbers relating to Flash Manufacturing & Services PMI, scheduled for Wednesday release, indicate slower expansion of these sectors, at 52.7 and 55.5 v/s 52.9 & 55.6 for German Manufacturing & Services respectively and the 52.8 & 54.00 against 52.8 & 54.2 for the same EU sectors and favor the EUR correction. Moreover,Final CPI, scheduled for Wednesday, is more likely to confirm its initial 0.1% forecast and is less likely to trigger any big EUR moves while Thursday's German Ifo Business Climate is likely to print the highest levels since June 2014 and may help EUR extend its present advance.

With major market attention likely to focus on the FOMC outcome, a disappointment may provide counter strength to the EUR while economic numbers are likely favoring continuation of the regional currency's advance unless printing pessimistic marks.

GBP Traders Should Watch UK CPI, Job Details And Retail Sales

Recent economic numbers from UK have been quite downbeat and has resulted into a short-term downtrend in GBP; however, key statistics from the Britain, like CPI, labor market numbers and Retail Sales, may give decisive information to forecast near-term GBP trend.

After two consecutive negative prints, November month CPI, scheduled for Tuesday release, is expected to mark the highest level in four months with +0.1% against -0.1% prior while the Retail Sales, strong contributor to the UK GDP, is also likely to reverse its prior declines of -0.6% with +0.6% during its Thursday's announcement. However, numbers relating to October Average Earnings andUnemployment Rate, coupled with November Claimant Count Change, scheduled for release on Wednesday, portray mixed clues for UK job market with unchanged 5.3% unemployment rate and weaker earnings at 2.5% against 3.0% prior, together with a cut in claimant count to 0.9K from 3.3K registered during previous month.

Weaker than expected inflation mark could join the slew of downbeat UK economics and can magnify recent GBP decline; however, improvements in labor market numbers, coupled with Retail Sales growth, could limit further downside by the Britain's currency.

Details From Japan, New-Zealand and Canada Are The Rest To Observe

On Monday, quarterly release of the Bank of Japan's "tankan" survey revealed that the Japanese firms are planning to hold their large investment intact, favoring expectations concerning no change of monetary policy during the Friday's Bank of Japan's monetary policy meeting. However, the central bank's survey also revealed that these firms feel gloomy outlook ahead and the same may force the Japanese central bank to utter some dovish marks, favoring JPY downside. Though, the safe-haven demand can continue restrict extreme downside by the Japanese currency.

Quarterly release of New-Zealand GDP, scheduled for Thursday release, is more likely to disappoint NZD traders considering recent downsides by the dairy prices and pessimistic outlook of the world's largest industrial player, China. The prior releases was of 0.4% mark and a weaker than the mentioned number could magnify NZD downside.

Other than the plunge in Crude prices, which largely govern the CAD downside, monthly releases of Tuesday's Manufacturing Sales, coupled with CPI & Wholesale Sales, scheduled for Friday release, can help determine immediate moves by the Canadian Dollar. While Sales numbers could continue marking pessimistic marks and magnify the CAD south-run, recent improvements in inflation prints may give breathing space to the Loonie, as it is nicknamed, from its on-going decline; however, further weakness by the Crude price, Canada's main export, might force the Canadian currency to extend its southward trajectory.



“Original analysis is provided by Admiral Markets”

 

[Admiral Markets]

Holiday Season To Offer Quiet Market Sessions




Federal Reserve's once in a decade interest rate lift, to between 0.25% and 0.50%, coupled with the optimistic tone of Fed Chair, helped raising expectations for further interest rate hikes in 2016 and fueled the US Dollar Index (I.USDX) to snap a two-week of losing streak with more than 1% gain on a weekly basis. The Euro, however, remained weaker with ECB's monetary policy divergence as compared to the US Fed and a dovish message from the central bank's chief economist. Moving on, the GBP maintained its decline against majority of its counterparts as one of the BoE's MPC members favored a bit more of wait for the central bank's interest rate lift considering weaker inflation scenario while lesser than expected Earnings growth & higher Claimant Count Change became some more reasons for the UK currency to maintain its south-run. Moreover, the JPY remained firm after the BoJ announced changes in its massive stimulus program rather than altering the amount of QE while the NZD extended its gains with an improvement in dairy prices & higher GDP print; however, the AUD and CAD kept running into losses as global supply glut and pessimism at China favored additional downside of major commodity prices, including Copper and Crude.

With the Christmas just around the corner, market players are less likely to participate actively during final two weeks of 2015, resulting quiet trading sessions; however, GDP numbers from Canada, UK & US, coupled with US Durable Goods Orders and housing market details, are some of the important economics that might support Forex liquidity during the current holiday shortened week.

US GDP May Direct Further USD Moves

After global markets celebrated Fed's interest rate hike, the next question relates to future moves of the US central bank which recently sound more hawkish for its economic growth. Hence, final reading of Q3 2015 GDP becomes more important for the USD traders to determine whether the Fed has enough scope for further interest rate lift or not.



The US GDP registered considerable growth of 3.9% during Q2 2015; however, early estimations concerning third quarter growth marked 2.1% increase in US economic activity while final reading for the same, scheduled for Tuesday release, is expected to print 1.9% number. Considering recently upbeat US economics, the GDP is more likely to print a welcome number, offering an ease to the US central banker in further rate hikes; though, a pessimistic reading may raise the bars for the Fed to announce future lifts in its benchmark interest rate.

Other than the GDP, numbers relating to Existing and New Home Sales, scheduled for Tuesday and Wednesday respectively, coupled with Wednesday's Durable Goods Orders, are some other indicators that may help determine near-term USD moves. While Existing Home Sales are likely to decline a bit with 5.32M, compared to 5.36M prior, the New Home Sales number is expected to mark three months' high with 507K against 495K printed in October. Moreover, Durable Goods Ordersmay disappoint the USD traders with -0.6% contraction versus its 3.0% gains for the month of October while Core reading for the same is likely printing 0.1% growth against 0.5% prior.

Given the weaker readings by the headline US economics, mainly driven by the GDP, the Federal Reserve might have to wait for longer in order to announce another interest rate hike, favoring year-end profit booking moves by the US Dollar.

Growth Numbers To Help Forecast GBP & CAD Trend

Off-late the GBP has been on its southward trajectory as weaker economic readings, coupled with dovish messages from BoE members, favored prolonged easy monetary policy by the UK central bank. Though, higher than forecasted 0.5% growth rate by the Q3 2015 UK GDP number, scheduled for Wednesday release, may portray the nation's economic strength and harm some of the policy doves. Hence, a better print, more than the 0.5% second estimate & the previous 0.7% mark, could help the UK central bank in altering its economic outlook and signal an interest rate hike, which in-turn could trigger GBP up-move. In addition to the GDP number, UK Current Account detail, also scheduled for release on Wednesday, becomes an important indicator to foresee GBP moves. The current account deficit is likely to widen to -21.3B against its previous -16.8B and may magnify the recent GBP downside if the actual figure matches consensus.

Canadian Dollar (CAD) maintained its south-run ever since the Crude prices, nation's main export, plunged; however, monthly reading of the GDP and Retail Sales, scheduled for release on Wednesday, becomes important to forecast near-term moves by the Loonie, as it is nicknamed. Even if the GDP and Retail Sales both registered a -0.5% print during their latest announcement, chances witnessing downbeat numbers are higher as list of headline Canadian numbers have been pessimistic off-late. Should the Canadian headline numbers keep portraying weak economic fundamentals, coupled with on-going decline in Crude prices, the CAD is more likely to extend its decline against majority of its counterparts.

Japanese CPI, Unemployment Rate & Spending Details May Portray JPY Moves

Even if the JPY traders considered a change in BoJ's stimulus as a positive indicator and provided additional strength to the Japanese currency, monthly readings concerning Household spending, CPI & Unemployment Rate, scheduled for Friday, become important to foresee further JPY moves.

While the Household Spending is likely to cut its recent downside of -2.4% with -2.1% and CPI numbers for Tokyo Core CPI & National Core CPI are likely to improve, the Unemployment rate is expected to mark a higher number of 3.2% from its 3.1% prior. If the Japanese inflation numbers disappoint markets and the unemployment rate also ticks higher, concerns relating to the need of additional QE from BoJ can be renewed, favoring the JPY downside; however, safe-haven demand of the same Japanese Yen may help limit further decline by the currency.


“Original analysis is provided by Admiral Markets”

 

[Admiral Markets]

An Uneventful last week of 2015



Even if the year-end holiday season restricted market moves during last week, sluggish economic details pushed US Dollar Index (I.USDX) towards a negative weekly closing. The EUR and JPY remained mostly firm against majority of its counterparts and the GBP maintained its downturn with slower GDP growth indicating later than expected interest rate hike by the BoE. Moving on, the antipodeans, namely AUD, NZD and CAD, all stayed positive as commodity prices improved, lead by the Crude which gained heavily due to depleting U.S. inventories and a sustained cut in the number of US drilling rigs.

Current week, which will close the year 2015, can be termed as "an uneventful one" due to the lack of economic details scheduled for publish. However, US CB Consumer Confidence, Pending Home Sales and Chicago PMI might become helpful in forecasting near-term USD moves while official readings of Chinese Manufacturing & Non-Manufacturing PMI can help providing some intermediate moves to the global financial markets.

US Economics To Dominate This Week's Trading

Dearth of data-points from the rest of the global economics would drive market players' attention on the scheduled US economic details, namely CB Consumer Confidence, Pending Home Sales and Chicago PMI, to ascertain the Fed's ability to extend its monetary policy tightening path.

Amongst the scheduled US readings, monthly CB Consumer Confidence, up for Tuesday release, becomes more important as improvement in consumer sentiment, to an expected 93.9 from 2015 lows of 90.4, may support rest of the US economics and could help the central bank move forward in their interest rate hikes during 2016. Moving on, the Pending Home Sales, scheduled for release on Wednesday, is likely to register the highest growth in seven months, to +0.6% against +0.2% prior, while the Chicago PMI, to be released on Thursday, is expected to favor manufacturing expansion with 50.4 mark versus prior contraction of 48.7. Moreover, consensus relating to weekly Jobless Claims, out on Thursday, favors a three week high print of 274K against 267K registered in the previous week.

Surprise downbeat prints from the scheduled US numbers, coupled with the year-end profit booking, could magnify recent greenback declines and raise the bars for the Federal Reserve's 2016 rate hike series; however, absence of global economic statistics may continue limiting big moves.

Chinese PMIs Manage End Of The Week

In addition to the US details, official PMI numbers concerning the Manufacturing and Non-Manufacturing sectors of the world's largest industrial player, China, may manage to provide market moves during following trading sessions.

​

The aforementioned chart signals that the Chinese manufacturing sector has been continuously contracting during last four months; however, forecasts concerning the Manufacturing PMI for the December month, scheduled for Friday release, mentions a point closer print to the 50.0 mark, favoring expansion, with 49.9 against 49.6 prior while the Non-Manufacturing PMI is likely maintaining its up-move in above 50.00 number. Being the world's largest Industrial economy and the largest commodity consumer, another downbeat print by the Manufacturing PMI could negatively affect recent improvement in commodity prices and the commodity currencies, namely, AUD, CAD and NZD.

Year-end holidays, coupled with fewer economics, could continue limiting trading volumes during the uneventful last week of 2015; however, high degree of deviation from the scheduled data points might still trigger some volatile moves in the Forex market.



“Original analysis is provided by Admiral Markets”

 

[Admiral Markets]

2016 Starts With Handful of Economic Data-Points To Watch



Although weaker Home Sales and near six months high Jobless Claims drove down the US Dollar Index during last week of 2015, the greenback index (I.USDX) headed for the third annual winning streak as the Federal Reserve successfully lifted its benchmark interest rate from near-zero levels and conveyed an optimistic status relating to the health of world's largest economy. Contrast to the USD, currencies of Europe, Japan and some other global economies, like AUD, NZD, CHF and CAD, which gained during the dull trading days of last week, were mostly adhered to negative yearly closing with JPY going down for the record fourth year and the Euro slumped for a second year in a row on loose monetary policies. Further, China kept struggling with its economic weakness, as indicated by repeated below 50.00 readings of its headline Manufacturing PMIs, while the Crude prices, which plunged heavily during 2015, recovered a bit as tensions between Saudi Arabia and Iran escalated in last week, giving hope of supply disruptions from major crude producers.

As market players return from year-end holiday season, handful of economic data-points could offer volatile trading sessions during the current week. Notable amongst them are headline PMI numbers from US & UK, monthly details of US labor market and minutes of December FOMC meeting which triggered the Fed's first rate hike since 2006. Moreover, Inflation numbers from China and Europe, coupled with Australian Trade Balance and Building Permits, are some other indicators that might provide busy trading schedule to market participants.

US Job Numbers And FOMC Minutes Could Gain The Limelight

After witnessing another positive yearly close by the US Dollar Index, together with Fed's once in a decade interest rate hike, market players are now likely to focus more on consecutive rate lift-offs by the US central banker. Even if the Federal Reserve, during its latest monetary policy meeting, signaled that it could announce four interest rate hikes during 2016, all of them would be data-dependant and hence increases the importance of all the upcoming economic indicators, including this week's US employment details concerning December month. Moreover, minutes of recently concluded FOMC meeting would also become helpful to determine near-term USD moves as details of what exactly made the policy makers support an interest-rate hike and their preparedness for some more of the same moves during the current year will gain more attention.



As it can be witnessed from the aforementioned chart, US Unemployment has been steadily coming down while the NFP, another important indicator to gauge job market strength, maintained its level above 200K. However, details relating to both these headline job numbers for the December month, scheduled for Friday, can become helpful to see how these indicators are performing and whether the US central bank will be in a better position to follow their forecasted path of four rate hikes a year. While the Unemployment Rate and Average Earnings are less likely to change from their previous 5.0% and 0.2% numbers respectively, the NFP is expected to mark a small correction during the announcement with 202K mark against 211K prior. Even if downbeat numbers can trigger short-term USD decline, the same is less likely to favor drastic south-run unless being extremely passive as these numbers are only the first to be released in 2016.

Minutes of December FOMC meeting, scheduled to be released on Wednesday, can help portray upcoming moves of the greenback. During the meeting, the Federal Reserve matched market expectation of a 0.25% interest rate hike and the Fed Chair spread hawkish remarks relating to the strength of the US economy; however, the central banker held most of its quarterly economic forecast intact and said the upcoming interest moves will be gradual and data-dependent. Given the interest rate hike and upbeat comments from the Fed Chair, details favoring strong US economic outlook may help greenback gain some of its recently lost ground; however, discussions mentioning a delay in rate hike actions might trap the greenback for immediate downside.

In addition the headline events, monthly releases of ISM Manufacturing and Non-Manufacturing PMIs, ADP Non-farm Employment Change and Trade Balance are some other data-points that USD traders might be interested in looking for. Monday's ISM Manufacturing PMI is likely to inch closer to the 50 mark by printing 49.1 number against its more than a two year low of 48.6 marked during previous reading while ISM Non-Manufacturing PMI may continue its up-move with 56.00 mark versus 55.9 prior. Further, the ADP Non-Farm Employment Change, early indicator for Friday's NFP, which is up for Wednesday release, bears the consensus of marking 193K against 217K prior and the monthly Trade Balance details, scheduled for the same day release, may reveal a bit higher deficit of -44.0B compared to -43.9B registered previously. As majority of data-points signal a bit weaker start of USD, actual numbers meeting consensus can pave the way for first negative week of 2016.

EU CPI May Command EUR Moves

While there are fewer events to be published from Europe during the current week, Flash reading of December month CPI, up for Tuesday release, can help determine the inflationary scenario within the troubled region. The headline number is likely marking the highest level in more than a year with 0.4% mark against previously revised +0.2% and can help the EUR extend its recent short-covering rally. Moreover, German Factory Orders, scheduled for Thursday, can also help forecast immediate EUR moves as being the data of region's largest economy. The order growth is likely shrinking from its four month high of 1.8% to 0.1% and can limit the EUR gains. Hence, even if the positive inflation number can favor continuation of short-term EUR recovery, ECB's lose monetary policy, coupled with weaker factory order detail, may confine major gains by the Euro.

PMIs And Trade Balance To Portray Near-Term GBP Trend

Having realized Monday's three month low UK Manufacturing PMI, which printed 51.9 against 52.8 consensus & 52.5 prior, Tuesday's Construction PMI and Wednesday's Services PMI become crucial to base the GBP trades on; Moreover, November month Trade Balance details, scheduled for Friday, can also help depicting the short-term moves of the UK currency. While the Construction PMI is expected to mark 56.1 number against 55.3 prior and the trade deficit is also likely to shrink to -10.5B versus -11.8B, consensus relating to Services PMI reveals weakness into the crucial sector of UK economy with 55.6 mark against 55.9 prior. Journey of downbeat UK economics can continue favoring expectations of delayed interest-rate by the Bank of England, which in-turn might force the GBP traders to maintain their dovish outlook for the UK currency.

Details From China, Australia And Canada Are The Rest To Watch

Following dismal readings of Chinese Manufacturing PMIs, monthly details of inflation numbers from the dragon nation may help determine the inflationary pressure onto the troubled economy. While the CPI is expected to improve a bit from its 1.5% prior to 1.7% and the PPI is also likely to mark -5.8% versus -5.9% prior during their Saturday release, the PPI is still into the negative region. With the inflation numbers still struggling to provide upbeat scenario of world's largest industrial player, actual readings matching the same could add further weakness into the commodity prices and the commodity currencies, namely, AUD, CAD and NZD.

Even if weakness at the China, Australia's largest consumer, keep favoring AUD weakness, recent improvement in Australian data-points helped the nation's central bank, the RBA, avoid further interest rate cuts and triggered a short-covering rally in Aussie prices. Should monthly releases of Australian Building Approvals, Trade Balance and Retail Sales print mark upbeat numbers the AUD can extend its recent advance. The Building Approvals, scheduled for Thursday release, are expected to mark first contraction in three months with -2.8% against +3.9% prior while the Trade Deficit may shrink to -2.98B against -3.31B during the same day announcement. Moreover, Friday'sRetail Sales number is also likely to mark a bit slower growth 0.4% against 0.5% prior. While Chinese pessimism and expected downbeat readings may reverse AUD's near-term gains, strong numbers would strengthen the chances of another rate-cut hold and may further strengthen the Aussie, as it is nicknamed.

Canadian Dollar (CAD) has been the victim of weaker Crude prices and sluggish economics; though, recent tensions in middle-east helped the energy price advance which in-turn favored short-covering moves by the CAD. Though, Canadian job numbers for the month of December, coupled with Trade Balance, are likely details that can help forecast immediate CAD moves in addition to tracking updates relating to the Crude. Wednesday's Trade Balance details may trigger CAD recovery with -2.6B deficit against -2.8B prior which can be carried forward with 10.4K addition into the Employment Changeversus -35.7K prior and a stagnant Unemployment Rate at 7.1%. Recent geo-political tensions in Middle-East, which helped the Crude price pullback, may offer support to the Canadian Dollar's pullback in addition to the upbeat job numbers, if matched forecasts.


“Original analysis is provided by Admiral Markets”

 

[Admiral Markets]

Fewer Data-Points To Confine This Week’s Forex Moves




During the first full week of 2016, turmoil from China derailed the global financial markets by spreading heavy losses and dragged the US Dollar Index (I.USDX) down even as the December US non-farm payrolls number marked remarkable strength. Chinese pessimism, triggered by weaker headline PMIs, gained momentum during later part of the week when the PBOC devalued Yuan for eight consecutive days and caused losses to Crude and commodity oriented currencies, namely, AUD, NZD and CAD; however, the same move helped the JPY and the Gold prices due to safe-haven demand. Moreover, the GBP extended its downside with weaker than expected data-points while the EUR remained more or less stable with no major economics to publish.

Moving forward, the current week has fewer economic details that could confine big moves of the forex market. However, Australian job numbers, US Retail Sales, PPI, Empire State Manufacturing and UoM Consumer Sentiment, coupled with the UK Manufacturing Production, BoE meeting and the Chinese Trade Balance, are some of the data-points that might provide good trading opportunities.

Consumer Centric US Details Could Help Forecast USD Moves

While Chinese pessimism kept escalating fears that the Fed would find it difficult to introduce consecutive rate hikes, consumer-centric numbers, namely the Retail Sales and the UoM Consumer Sentiment, may help determine immediate moves of the greenback.

Other than the Thursday, when the weekly Jobless Claims number will be out (expected 275K v/s 277K prior), US economic calendar is active during Friday when monthly releases of Retail Sales, PPI, Empire State Manufacturing Index and the Preliminary reading of UoM Consumer Sentiment are scheduled for publish. Amongst them, the Retail Sales and the Consumer Sentiment are likely to drive this week's USD moves. Both these figures aren't favoring the greenback up-move as the Retail Salesgrowth is expected to contract for the first time in six months with -0.1% mark versus +0.2% prior while the Core Retail-Sales forecast favors 0.2% print against 0.4% prior. Also, the preliminary reading of UoM Consumer Sentiment gauge is also likely to remain near the upwardly revised previous mark of 92.6 by marking 92.7 number. Moreover, the PPI is expected to liquidate its last month's gain of +0.3% with another negative reading of -0.2% and the Empire State Manufacturing, even after likely to mark the six month highs with -4.1 against -4.6 prior, may remain in the negative region. With recently released upbeat job details failing to help the greenback extend 2015 gains, weaker consumer-centric data-points may provide further downside to the US Dollar.

Chinese Trade Balance And Australian Labor Market Numbers To Portray AUD Trend

Even if troubles at China, Australia's largest consumer, keep pushing the Australian Dollar down, December month Chinese Trade Balance numbers and labor market details from the Australia may help determine near-term Australian Dollar (AUD) moves.



Wednesday's Chinese Trade Balance is expected to match recently downbeat Chinese numbers with smaller surplus of 339B against 343B prior and the Australian Bureau of Statistics is also expected to reveal sharp turnaround in December month labor market numbers during its Thursday announcement. The Employment Change is likely contracting with the highest pace in 10 months, by printing -11.0K versus 71.4K released during last month while the Unemployment rate is also forecasted to disturb three month slid with a 5.9% mark against 5.8% prior.

Should Australian job numbers cause disappointment, negative wipes from China gets stronger, signaling further downside of the AUD. On the contrary, better than expected releases still need to confront the pessimism from its largest consumer and might provide only short-lived up-moves to the nation's currency unless being drastically high.

GBP Traders Should Look For UK Manufacturing Production & BoE Details

Weaker UK details continue spreading worries that the BoE policy makers might have to wait longer before announcing monetary policy tightening and continue pulling the GBP downwards. Though, monthly details of UK Manufacturing Production, scheduled for Tuesday, and the Thursday's monetary policy meeting by the Bank of England (BoE) could help foresee near-term moves of the UK currency.

Forecast concerning November month Manufacturing Production reflects a reversal of prior -0.4% contraction with +0.1% mark and only one BoE MPC member is expected to vote for an interest rate hike. However, recently released negative economic data-points, coupled with the Chinese turmoil, might force the UK central bank in uttering some dovish words. Even if the Manufacturing Production prints a welcome number, dovish BoE statement, due to Chinese trauma, may continue dragging the GBP towards south unless there is extreme up-mark by the data.

Japanese Details May Support Projecting Further JPY Up-move

Global market threats, mainly emanating from China, have continued helping the safe-haven demand of the Japanese Yen (JPY); however, monthly releases of Consumer Confidence, Economy Watchers Sentiment and the PPI, can provide fundamental support to project further up-moves of the JPY.

Although, Tuesday's Japanese Consumer Confidence is expected to mark a bit weaker print of 42.3 against 42.6 prior and the Economy watchers sentiment is also likely revealing another below 50 reading with 46.7 versus 46.1 previous, December month PPI, scheduled for Thursday, is expected to mark the highest number since April 2015 with -0.4% as compared to -3.6% revealed for the month of November.

As global pessimism favors safe-haven demand of the JPY, upbeat economic data-points could help the BoJ in refraining from further monetary policy easing and can provide extended up-move to the Japanese currency.



“Original analysis is provided by Admiral Markets”

 

[Admiral Markets]

Inflation, PMIs & Central Bankers To Keep Traders Busy



Last week, "Risk-off" sentiment in the global financial markets, mainly driven by Chinese pessimism, kept supporting safe-havens, including JPY, Gold and USD, as majority of the global economies had no important data-points to publish. Adding to this, six month high US Consumer Confidence provided extra strength to the greenback in countering negative impacts of downbeat US Retail Sales, PPI, Jobless, Manufacturing & Industrial numbers while registering weekly positive closing. Moving on, the GBP extended its downside to multi-year lows against the USD with continued stream of weaker economics favoring BoE policymakers' decision to wait and watch for further monetary policy action while the EUR performed negatively with absence of economic support. Moreover, commodity currencies, namely AUD, CAD and NZD, went on extending their south-run as commodity sell-off failed to hold its breath with continued crash in crude oil prices and the Chinese currency (Yuan) devaluation.

Unlike the week gone-by, the upcoming week, which starts with the US bank holiday on Monday, has many important events to fuel the forex market. Amongst them, Chinese GDP and Industrial Production, Inflation numbers from UK, US and Canada, coupled with monetary policy meetings by the BoC and ECB, are likely to gain major attention. Also, UK Retail Sales & Job details, US housing market numbers and the slew of PMIs from EU & US, could offer additional volatility to participants of global financial markets.

Chinese Economics Could Continue Fueling Wild Moves

Off-late the China, world's second largest economy and the biggest industrial player, has been fueling global market volatility as the nation's economy continues to struggle with its downbeat data-points and the currency devaluation. Being one of the major market influencer and large commodity user, pessimism at the domestic front spread fears across the globe and help safe-havens. The dragon nation is scheduled for publish its headline GDP and the Industrial Production numbers on Tuesday that could provide further insight on how deep-rooted the present Chinese problem is.



As can be noticed from the aforementioned graph, Chinese Industrial Production and the GDP generally goes hand-in-hand as the economy is heavily dependent on its manufacturing sector and hence another weaker print of the Industrial production might force the forecasters to expect slower economic growth. The Industrial production marked downbeat numbers in September and October before it printed 6.2% growth during November, the manufacturing output is likely registering 6.0% number during the month of December. Moving on, Q4 2015 GDP growth rate is expected to maintain its 6.9% increase.

While stagnant GDP growth rate might soothe some of the recent scars of commodity decline, weaker Industrial production details could continue dragging down the commodity currencies, namely - CAD, AUD and NZD, and can favor more volatility in the market.

US CPI And Housing Market Details To Help Determine USD Moves

The US markets which are off for Monday, could witness magnified volatility on Wednesday when the benchmark inflation number, CPI, and the headline housing market readings, namely Building Permits and Housing Starts, are scheduled for publish. Moreover, Thursday's Philly Fed Manufacturing Index & Jobless Claims, followed by Friday's Existing Home Sales could offer additional help to forecast immediate US Dollar moves.

While the CPI is likely maintaining its 0.0% mark again and the Core reading is expected to print 0.2% increase one more time, the Building Permits may reveal a bit of weakness in US housing market with 1.20M number against 1.28M prior; however, expected gains in Housing Starts and Existing Home Sales, may counter the pessimism with 1.19M v/s previous 1.17M and the 5.21M as compared to 4.76M revealed during prior month respectively. Further, consensus relating to the Philly Fed Manufacturing Index and the Jobless Claims reveal less of change with the Philly index might mark -3.1 number versus -5.9 prior and Unemployment Claims can print 281K against 284K prior.

Even if inflation readings are less likely to support the USD up-move, if matching with forecast, upbeat housing market details, coupled with on-going risk-off market mode, can again help the greenback land on a positive side.

ECB, European ZEW Index and Headline PMIs Can Portray EUR Trend

After witnessing nearly two-weeks of no major European economics, the EU economic calendar is scheduled for releasing ZEW Economic Sentiment on Tuesday, followed by the ECB meeting on Thursday and the headline Flash PMIs on Friday.

Although the ECB is less likely to announce any monetary policy change during its upcoming meeting, comments by the ECB Governor, following interest rate decision, is more likely to provide noticeable EUR moves. Recent pessimism across the globe might force the central banker towards speaking some dovish words relating to the inflation outlook; however, with the recently announced QE extension, the ECB Chief may refrain from spreading worries and can maintain its optimistic speech-tone.

Consensus relating to the ZEW economic sentiment indicates weaker points from EU and Germany, as the EU number might mark 27.9 against 33.9 prior while the German reading of the same index is expected to print 8.2 as compared to 16.1 prior. Moreover, monthly Flash PMIs relating to the EU and German Manufacturing and Services sector may also favor recent EUR weakness as both these details are likely revealing soft numbers with the EU Flash Manufacturing PMI expected to print 53.0 against 53.2 prior and the Services PMI may remain intact at 54.2 prior while the German Flash Manufacturing and Services PMIs likely showing 53.0 against 53.2 prior and the 55.6 as compared to the 56.00 marked in previous month respectively.

With majority of the data-points favoring continued weakness in the European currency, dovish tone of the ECB President might extend the stretch the recent EUR weakness.

GBP Traders To Watch UK Job Details, CPI And Retail Sales

Slew on negative data-points and a nearness to Brexit decision continue dragging down the UK currency off-late; however, Tuesday's monthly print of CPI, headline labor market numbers, scheduled for Wednesday, and the December month Retail Sales, up for Friday release, are likely important data-points that could flash lights on further GBP moves.

Even if the CPI and Unemployment rate are likely to remain unchanged at 0.1% and 5.2% prior respectively, Claimant count change may increase to 4.1K against 3.9K prior and Earnings could weaken with 2.1% growth against 2.4% prior. Moreover, the Retail Sales are expected to contract by -0.1% from +1.7% marked during November. Hence, headline data-points support BoE's loose monetary policy and might result further GBP south-run except being surprisingly positive.

Canadian CPI and BoC May Guide CAD Traders

Crash of Crude prices, Canada's main export, coupled with weaker data-points, have been forcing the Canadian Dollar (CAD) to keep running down against majority of its counterparts; however, the Bank of Canada (BoC) has been holding its benchmark interest-rate intact during past three meetings and becomes crucial to foresee upcoming trend of the CAD.

Monetary policy meeting by the BoC, scheduled for Wednesday, is expected to deliver a 0.25% cut in its overnight rate after the central banker held it unchanged during September, October and December. The meeting will be followed by a press conference from the
BOC Governor which might reflect future moves of the policy makers and could reveal the economic scenario of the nation. Moreover, December month CPI, up for Friday, may extend its recent negative print and can magnify CAD decline.

With the on-going plunge in Crude, chances are more likely that the central bank would match with the consensus & can drive the CAD down; though, a surprise announcement to refrain from the interest rate cuts, coupled with hawkish tone of the Governor, might help the Loonie, as it is nicknamed, reverse some of its near-term losses.


“Original analysis is provided by Admiral Markets”