Weekly Forex Forecast: 19th to 23rd January
The Swiss Shocker saw the Swiss Franc take the lead, rising 18.11% against the Greenback, while the Euro understandably turned the weakest losing -2.39% to the buck, as the largest known buyer of Euros now exits the markets. The coming week is expected to see major central bank policy decisions as well as key economic statistics.
The markets are widely expecting to see a major announcement from Mario Draghi on the proposed Quantitative Easing plan, which is likely to the European currencies subdued in the run up to the event. Most importantly, over the coming weekend, Greece will be going to polls with the outcome further fuelling volatility over the next week.
Fundamentals for the Week 19 – 23 Jan
| Date | Event | Estimates |
| 19 January | Japan revised industrial production m/m | – |
| Japan consumer confidence | 38.6 | |
| Switzerland PPI m/m | -0.6% | |
| US Bank Holiday | ||
| 20 January | China GDP q/y | 7.2% |
| China industrial production m/m | 7.4% | |
| German PPI m/m | -0.3% | |
| German ZEW Economic sentiment | 40.1 | |
| Eurozone ZEW Economic sentiment | 37.6 | |
| Canada manufacturing sales m/m | -0.5% | |
| New Zealand Global dairy trade | ||
| New Zealand quarterly CPI | 0% | |
| 21 January | Australia Westpac consumer sentiment | – |
| BoJ monetary policy statement | ||
| BoJ press conference | ||
| UK average earnings 3m/y | 1.7% | |
| UK Claimant count change | -24.2k | |
| UK unemployment rate | 5.9% | |
| BoE MPC meeting minutes | – | |
| Canada wholesale sales m/m | 0.2% | |
| US Building permits | 106mln | |
| US Housing starts | 1.04mln | |
| BoC Monetary policy statement | ||
| 22 January | Italy retail sales m/m | 0.1% |
| ECB Monetary Policy statement | – | |
| ECB Press conference | – | |
| Eurozone consumer confidence | -11 | |
| 23 January | China HSBC Flash manufacturing PMI | 49.5 |
| French Flash manufacturing PMI | 48.1 | |
| French Flash services PMI | 50.9 | |
| German Flash manufacturing PMI | 51.8 | |
| German Flash services PMI | 526 | |
| Eurozone Flash manufacturing PMI | 51 | |
| Eurozone Flash services PMI | 52.1 | |
| UK retail sales m/m | -0.6% | |
| Canada Core CPI m/m | -0.3% | |
| Canada CPI m/m | -0.5% | |
| Canada Core retail sales m/m | 0.5% | |
| US Flash manufacturing PMI | 54.1 |
Currencies/Events to Watch this Week
Euro: Its decision time for Mario Draghi and team and they decide the fate of the Euro. With markets heavily speculating on the announcement of the QE, anything short of expectations could upset the Euro shorts. The ECB’s meeting is likely to overshadow all other economic releases from the Eurozone this week.
US Dollar: The Greenback takes a backseat this week with a short trading week as markets remain closed on Monday, 19th January on account of Martin Luther King holiday.
British Pound: Retail sales and monthly unemployment numbers will keep the British Pound busy this week. Despite the slowdown, the economic activity continues to remain steady. The BoE’s vote count is unlikely to have not much of an effect, unless we get to see more dissenters voting in favor of a rate hike, which is unlikely given the subdued inflation in the region.
Yen: Bank of Japan will be holding its monthly monetary policy meeting followed by a press conference. It is expected that the BoJ could cut its inflation expectations for the year on account of the decline in crude oil prices. However, the monetary policy could hold some surprises, although an expansion to the QQE is unlikely to be announced at this event.
Canadian Dollar: The Loonie will see a lot of economic data coming out this week. The Canadian dollar was hit mostly due to falling oil prices but managed to gain strength in the aftermath of the Swiss shocker. The Bank of Canada will be holding its monthly monetary policy meeting, but expectations are for the policy to remain unchanged. Comments on inflation and GDP growth could however shift the scales to either side.
FX Majors Weekly Pivots
| R3 | R2 | R1 | Pivot | S1 | S2 | S3 | |
| EURUSD | 1.2214 | 1.2042 | 1.1804 | 1.1631 | 1.1393 | 1.122 | 1.0982 |
| GBPUSD | 1.5448 | 1.5358 | 1.5257 | 1.5167 | 1.5066 | 1.4976 | 1.4875 |
| USDCAD | 1.232 | 1.2183 | 1.2077 | 1.194 | 1.1835 | 1.1698 | 1.1592 |
| USDJPY | 122.796 | 121.058 | 119.334 | 117.596 | 115.872 | 114.134 | 112.41 |
| USDCHF | 1.1669 | 1.0954 | 0.9783 | 0.9068 | 0.7869 | 0.7182 | 0.601 |
