Weekly Forex Forecast: Dec 07 – 11

Dec 07, 4:57 am
Swiss francs

The Swiss Franc was the top performing currency last week, gaining nearly 3.37% for the week. The gains came about largely as the ECB’s monetary policy announcement fell short of market expectations leading to the Euro surging and the Swiss Franc gaining ground as well. The Kiwi was also trending stronger last week gaining 3.34%, mostly on the US Dollar’s weakness. Lack of any major economic data kept the Kiwi well supported.

Weekly Spot FX Performance – 04/12/2015 (Source: Finviz.com)
Weekly Spot FX Performance – 04/12/2015 (Source: Finviz.com)

The Yen was the weakest currency last week followed by the US Dollar. The Greenback’s weakness came about on a stronger Euro which surged nearly 2.0% after the ECB’s announcement. With no further expansion to the monthly bond purchases from the European Central Bank, the markets which were previously oversold on the Euro saw the single currency rebound strongly. Despite a better than expected jobs report and hawkish comments from Janet Yellen over the week, the Greenback eased across the board.

Fundamentals for the Week 07/12 – 11/12

Date TimeCurrency DetailForecast Previous
07-Dec00:30AUDAIG Construction Index52.1
02:30AUDANZ Job Advertisements m/m0.40%
07:00JPYLeading Indicators102.90%101.60%
09:00EURGerman Industrial Production m/m0.80%-1.10%
10:00CHFForeign Currency Reserves551B
7th-8thGBPHalifax HPI m/m0.30%1.10%
11:30EURSentix Investor Confidence17.215.1
17:00USDLabor Market Conditions Index m/m1.6
22:00USDConsumer Credit m/m18.3B28.9B
23:45NZDManufacturing Sales q/q0.40%
08-Dec01:50JPYCurrent Account1.53T0.78T
JPYFinal GDP q/q0.10%-0.20%
JPYBank Lending y/y2.50%
JPYFinal GDP Price Index y/y2.00%2.00%
02:01GBPBRC Retail Sales Monitor y/y-0.20%
02:30AUDNAB Business Confidence2
TentativeCNYTrade Balance395B393B
TentativeCNYUSD-Denominated Trade Balance64.2B61.6B
07:00JPYEconomy Watchers Sentiment48.648.2
All DayEURItalian Bank Holiday
11:06JPYBOJ Gov Kuroda Speaks
11:30GBPManufacturing Production m/m-0.10%0.80%
GBPIndustrial Production m/m0.00%-0.20%
12:00EURRevised GDP q/q0.30%0.30%
All DayEURECOFIN Meetings
13:00USDNFIB Small Business Index96.696.1
15:15CADHousing Starts198K
15:30CADBuilding Permits m/m-6.70%
17:00GBPNIESR GDP Estimate0.60%
USDJOLTS Job Openings5.59M5.53M
USDIBD/TIPP Economic Optimism45.245.5
19:50CADBOC Gov Poloz Speaks
09-Dec01:30AUDWestpac Consumer Sentiment3.90%
01:50JPYCore Machinery Orders m/m-1.50%7.50%
JPYM2 Money Stock y/y3.50%3.60%
02:30AUDHome Loans m/m-1.00%2.00%
03:30CNYCPI y/y1.40%1.30%
CNYPPI y/y-5.90%-5.90%
08:00JPYPrelim Machine Tool Orders y/y-22.90%
08:45CHFUnemployment Rate3.40%3.40%
09:00EURGerman Trade Balance19.2B19.4B
10th-17thCNYM2 Money Supply y/y13.40%13.50%
12:30GBPFPC Meeting Minutes
17:00USDWholesale Inventories m/m0.20%0.50%
17:30USDCrude Oil Inventories1.2M
22:00NZDOfficial Cash Rate2.50%2.75%
NZDRBNZ Rate Statement
NZDRBNZ Monetary Policy Statement
22:05NZDRBNZ Press Conference
10-Dec01:50JPYBSI Manufacturing Index12.111
JPYPPI y/y-3.80%-3.80%
02:00AUDMI Inflation Expectations3.50%
02:01GBPRICS House Price Balance47%49%
02:30AUDEmployment Change-10.0K58.6K
AUDUnemployment Rate6.00%5.90%
08:30EURFrench Final Non-Farm Payrolls q/q0.10%0.10%
09:45EURFrench CPI m/m0.00%0.10%
EURFrench Industrial Production m/m-0.10%0.10%
10:30CHFLibor Rate-0.75%-0.75%
CHFSNB Monetary Policy Assessment
CHFSNB Press Conference
11:30GBPTrade Balance-9.8B-9.4B
14:00GBPMPC Official Bank Rate Votes1-0-81-0-8
GBPMonetary Policy Summary
GBPOfficial Bank Rate0.50%0.50%
GBPAsset Purchase Facility375B375B
GBPMPC Asset Purchase Facility Votes0-0-90-0-9
15:30CADNHPI m/m0.10%0.10%
CADCapacity Utilization Rate81.30%
USDUnemployment Claims266K269K
USDImport Prices m/m-0.80%-0.50%
20:00EURGerman Buba President Weidmann Speaks
23:30NZDBusiness NZ Manufacturing Index53.3
23:45NZDFPI m/m-1.20%
11-Dec09:00EURGerman Final CPI m/m0.10%0.10%
EURGerman WPI m/m0.20%-0.40%
11:00EURItalian Industrial Production m/m0.30%0.20%
11:30GBPConstruction Output m/m1.10%-0.20%
GBPConsumer Inflation Expectations2.00%
12:15EURTargeted LTRO15.5B
13:00EURItalian Quarterly Unemployment Rate11.90%12.40%
15:30USDCore Retail Sales m/m0.20%
USDPPI m/m-0.40%
USDRetail Sales m/m0.10%
USDCore PPI m/m-0.30%
17:00USDPrelim UoM Consumer Sentiment91.3
USDBusiness Inventories m/m0.30%
USDPrelim UoM Inflation Expectations2.70%

Time: GMT+2

Currencies/Events to Watch this Week

AUD: The Australian unemployment rate will be the big event risk for the AUD this coming week. Expectations are for the unemployment rate to tick back to 6.0% after declining to 5.9% a month ago in October. On the monthly employment change, expectations are for a decline of -10k, down from 58.6k jobs added last month. While the expectations are dovish, a surprise could keep the Aussie well supported. However, in the event of a downside surprise, the Aussie could be looking to erase some of the strong gains made during the past few weeks.

CAD: Data from Canada this week is relatively quiet with the exception of a speech from BoC Governor, Poloz who is due to speak on Tuesday, December 8th. The markets will also be looking to the housing starts and building permits numbers, which declined -6.7% last month.

CHF: The SNB takes center stage the coming week with the Libor rate and the monetary policy announcement. Expectations are mixed with a dovish bias and that the SNB could look towards cutting rates steeper into the negative. However, with the ECB falling short of expanding the QE program, the SNB could remain in a wait and watch mode. The recent strengthening of the Swiss Franc is another concern which could be a focus from the SNB this week.

China: Chinese inflation and producer price index numbers are due this week on Wednesday, 9th December.  The annual inflation in China is expected to come in at 1.4%, up from 1.3% previously while producer price index is expected to remain weak at -5.9%. A downside surprise could keep the markets on edge however ahead of the Fed’s rate hike decision coming up in a few weeks.

EUR: The week ahead for the Eurozone is busy with various economic data but ones which are most likely to play any major role in the markets. The Eurozone’s revised quarterly GDP numbers will be the main data point to look to with expectations of a 0.3% quarterly expansion, unchanged from the previous quarter. German final CPI numbers are also due for release with expectations of a 0.1% increase in inflation. The ECB’s TLTRO is also due later this week.

GBP: The Bank of England will be in focus in the UK this week as the Central Bank meets. Expectations are flat with no change to the rate hike votes which are expected to remain unchanged at 1 – 8. With inflation staying flat and the third quarter GDP confirmed at 0.5%, the BoE could strike a dovish tone in the markets rather than rake up any rate hike expectations. Other data during the week includes the UK industrial and manufacturing production numbers.

JPY: The third quarter final GDP numbers from Japan are due for release on December 8th. Expectations are for a 0.1% revised estimate after the previous reading of -0.2% contraction. BoJ Governor Kuroda is also expected to speak during the week. Besides these two main events, the Yen is likely to remain on the back foot.

NZD: The RBNZ will be meeting this week for its monetary policy preview. Heading into the event, expectations are for the RBNZ to deliver anther 25bps rate cut at this meeting, due on December 9th. With the Fed poised to meet in just under two weeks time, the RBNZ could surprise by staying neutral, which could keep the Kiwi well supported. However, given the strong rally over the past weeks, the RBNZ could strike a dovish tone.

USD: The US Dollar is likely to remain quiet for the most part of the week but momentum is likely to pick up towards Friday. Retail sales and PPI numbers are due with expectations of a 0.3% increase on the headline retail sales and 0.2% increase on the core. The UoM consumer sentiment and inflation expectations are also due over the week.

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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