Weekly Forex Forecast: 5th to 9th January

Trading is expected to return to normalcy in what would be the first full trading week of the year. With the start of a new month, lot of data is expected to be released during the week, which should keep the forex markets busy for the week ahead.

Fundamentals for the Week 5th to 9th January

Date	Event	Estimates
05 January	Germany preliminary CPI m/m	0.1%
	Switzerland SVME PMI	52.9
	Eurozone Sentix investor confidence	-0.9
	UK Construction PMI	59.2
06 January	Australia trade balance	-1.59bn
	China HSBC services PMI	–
	Spain services PMI	52.9
	Italy services PMI	51.4
	Eurozone final services PMI	51.9
	UK services PMI	58.9
	New Zealand Global dairy prices	–
	US Final services PMI	53.8
	US ISM non-manufacturing PMI	58.2
	US factory orders m/m	-0.3%
07 January	German retail sales m/m	0.2%
	Italy unemployment rate	13.3%
	Eurozone CPI flash estimates y/y	0%
	Eurozone core CPI flash estimates y/y	0.6%
	Eurozone unemployment rate	11.5%
	Italy preliminary CPI m/m	-0.2%
	US ADP nonfarm payroll change	227k
	Canada trade balance	-0.2bn
	US trade balance	-42.3bn
	Canada Ivey PMI	52.3
	FOMC meeting minutes	–
08 January	Australia building approvals m/m	-2.7%
	German factory orders m/m	-0.6%
	Eurozone retail sales m/m	0.3%
	Eurozone PPI m/m	-0.2%
	BoE bank rate	0.5%
	US weekly unemployment claims	291k
09 January	Australia retail sales m/m	0.3%
	China CPI y/y	1.5%
	China PPI y/y	-3.1%
	Japan leading indicators	104.9%
	Switzerland unemployment rate	3.1%
	German industrial production m/m	0.4%
	French industrial production m/m	0.4%
	Switzerland CPI m/m	-0.3%
	UK manufacturing production m/m	0.4%
	UK construction output m/m	1.3%
	UK industrial output m/m	0.2%
	Canada housing starts	191k
	Canada building permits m/m	0.8%
	Canada employment change	10.3k
	Canada unemployment rate	6.6%
	US NFP	241k
	US unemployment rate	5.7%
	US average hourly earnings	0.2%

 

Currencies/Events to Watch this Week

• The Eurozone takes focus in the first part of the week with preliminary and flash CPI estimates on the tap. With Spain already posting negative inflation, the market expectations are for a wider fall in inflation overall, including the Eurozone monthly headline CPI expected to remain flat. If the actual readings meet estimates, the markets will turn extremely bearish on the Euro. The risk however is should CPI come out better than expected, we could see a short squeeze rally in the EURUSD.
• UK construction and services PMI along with the BoE’s monthly monetary policy minutes will set the tone for the British sterling this week. While the BoE is expected to bring no change to interest rates, the markets will be more focused on the PMI and construction and manufacturing output releases during the week.
• Canada will be heading into an important week with the Ivey PMI followed by the monthly labor market data. Last month’s Canadian unemployment rate rose to 6.6%, up from 6.5% previously and markets are expecting the unemployment rate to be stable for the month.
• The US heads into a very important week starting with the December FOMC meeting minutes concluding the week with the monthly nonfarm payroll data, which is expected to show an improvement in the unemployment rate, while the monthly nonfarm payroll change is expected to be softer at 241k after last month’s 321k solid job growth.

FX Majors Weekly Pivots

	R3	R2	R1	Pivot	S1	S2	S3
EURUSD	1.2367	1.2293	1.2147	1.2074	1.1928	1.1854	1.1708
GBPUSD	1.5817	1.5718	1.5526	1.5427	1.5235	1.5136	1.4944
USDCAD	1.2029	1.1897	1.1831	1.1698	1.1632	1.1499	1.1433
USDJPY	123.068	121.905	121.196	120.033	119.324	118.161	117.452
USDCHF	1.0239	1.0127	1.0070	0.9957	0.9900	0.9787	0.973