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 Time Currency Detail Forecast Previous
07-Dec 00:30 AUD AIG Construction Index 52.1
02:30 AUD ANZ Job Advertisements m/m 0.40%
07:00 JPY Leading Indicators 102.90% 101.60%
09:00 EUR German Industrial Production m/m 0.80% -1.10%
10:00 CHF Foreign Currency Reserves 551B
7th-8th GBP Halifax HPI m/m 0.30% 1.10%
11:30 EUR Sentix Investor Confidence 17.2 15.1
17:00 USD Labor Market Conditions Index m/m 1.6
22:00 USD Consumer Credit m/m 18.3B 28.9B
23:45 NZD Manufacturing Sales q/q 0.40%
08-Dec 01:50 JPY Current Account 1.53T 0.78T
JPY Final GDP q/q 0.10% -0.20%
JPY Bank Lending y/y 2.50%
JPY Final GDP Price Index y/y 2.00% 2.00%
02:01 GBP BRC Retail Sales Monitor y/y -0.20%
02:30 AUD NAB Business Confidence 2
Tentative CNY Trade Balance 395B 393B
Tentative CNY USD-Denominated Trade Balance 64.2B 61.6B
07:00 JPY Economy Watchers Sentiment 48.6 48.2
All Day EUR Italian Bank Holiday
11:06 JPY BOJ Gov Kuroda Speaks
11:30 GBP Manufacturing Production m/m -0.10% 0.80%
GBP Industrial Production m/m 0.00% -0.20%
12:00 EUR Revised GDP q/q 0.30% 0.30%
All Day EUR ECOFIN Meetings
13:00 USD NFIB Small Business Index 96.6 96.1
15:15 CAD Housing Starts 198K
15:30 CAD Building Permits m/m -6.70%
17:00 GBP NIESR GDP Estimate 0.60%
USD JOLTS Job Openings 5.59M 5.53M
USD IBD/TIPP Economic Optimism 45.2 45.5
19:50 CAD BOC Gov Poloz Speaks
09-Dec 01:30 AUD Westpac Consumer Sentiment 3.90%
01:50 JPY Core Machinery Orders m/m -1.50% 7.50%
JPY M2 Money Stock y/y 3.50% 3.60%
02:30 AUD Home Loans m/m -1.00% 2.00%
03:30 CNY CPI y/y 1.40% 1.30%
CNY PPI y/y -5.90% -5.90%
08:00 JPY Prelim Machine Tool Orders y/y -22.90%
08:45 CHF Unemployment Rate 3.40% 3.40%
09:00 EUR German Trade Balance 19.2B 19.4B
10th-17th CNY M2 Money Supply y/y 13.40% 13.50%
12:30 GBP FPC Meeting Minutes
17:00 USD Wholesale Inventories m/m 0.20% 0.50%
17:30 USD Crude Oil Inventories 1.2M
22:00 NZD Official Cash Rate 2.50% 2.75%
NZD RBNZ Rate Statement
NZD RBNZ Monetary Policy Statement
22:05 NZD RBNZ Press Conference
10-Dec 01:50 JPY BSI Manufacturing Index 12.1 11
JPY PPI y/y -3.80% -3.80%
02:00 AUD MI Inflation Expectations 3.50%
02:01 GBP RICS House Price Balance 47% 49%
02:30 AUD Employment Change -10.0K 58.6K
AUD Unemployment Rate 6.00% 5.90%
08:30 EUR French Final Non-Farm Payrolls q/q 0.10% 0.10%
09:45 EUR French CPI m/m 0.00% 0.10%
EUR French Industrial Production m/m -0.10% 0.10%
10:30 CHF Libor Rate -0.75% -0.75%
CHF SNB Monetary Policy Assessment
CHF SNB Press Conference
11:30 GBP Trade Balance -9.8B -9.4B
14:00 GBP MPC Official Bank Rate Votes 1-0-8 1-0-8
GBP Monetary Policy Summary
GBP Official Bank Rate 0.50% 0.50%
GBP Asset Purchase Facility 375B 375B
GBP MPC Asset Purchase Facility Votes 0-0-9 0-0-9
15:30 CAD NHPI m/m 0.10% 0.10%
CAD Capacity Utilization Rate 81.30%
USD Unemployment Claims 266K 269K
USD Import Prices m/m -0.80% -0.50%
20:00 EUR German Buba President Weidmann Speaks
23:30 NZD Business NZ Manufacturing Index 53.3
23:45 NZD FPI m/m -1.20%
11-Dec 09:00 EUR German Final CPI m/m 0.10% 0.10%
EUR German WPI m/m 0.20% -0.40%
11:00 EUR Italian Industrial Production m/m 0.30% 0.20%
11:30 GBP Construction Output m/m 1.10% -0.20%
GBP Consumer Inflation Expectations 2.00%
12:15 EUR Targeted LTRO 15.5B
13:00 EUR Italian Quarterly Unemployment Rate 11.90% 12.40%
15:30 USD Core Retail Sales m/m 0.20%
USD PPI m/m -0.40%
USD Retail Sales m/m 0.10%
USD Core PPI m/m -0.30%
17:00 USD Prelim UoM Consumer Sentiment 91.3
USD Business Inventories m/m 0.30%
USD Prelim UoM Inflation Expectations 2.70%

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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