Weekly Forex Forecast: 16th to 20th February

The Kiwi and the British Pound were the strongest currencies last week as a weaker Greenback helped push other currencies such as the Euro, Canadian Dollar and the Yen to gain. The Australian Dollar was the weakest, besides the Swiss Franc, mostly on account of a weaker than expected jobs report which could potentially add to the RBA’s dovish views expediting further rate cuts on the horizon.

The Greenback closed in the red for a third consecutive weak signaling a technical correction in place. However, we will have to wait for a bit more confirmation in this regards as this week’s fundamental events could potentially shift the bias in the Greenback.

Fundamentals for the Week 9 – 13 Feb

Date	Event	Estimates
16 February	Japan Preliminary GDP q/q	0.9%
	Japan Prelim GDP price index y/y	1.9%
	Japan revised industrial production m/m	1%
	US Bank holiday
17 February	RBA Monetary policy minutes	–
	China FDI ytd	–
	UK CPI y/y	0.3%
	UK Core CPI y/y	1.3%
	German ZEW economic sentiment	56.2
	Eurozone ZEW economic sentiment	51.3
	US Empire state manufacturing	9.1
	New Zealand Global dairy price index	–
	US NAHB Housing market index	58
	SNB Thomas Jordan speech
18 February	BoJ monetary policy statement
	BoJ press conference
	UK claimant count change	-25.2k
	UK unemployment rate	5.8%
	BoE meeting minutes	–
	UK average earnings index 3m/y	1.7%
	Canada wholesale sales m/m	0.4%
	US building permits m/m	1.08mn
	US PPI m/m	0.2%
	US Housing starts	1.07mn
	US industrial production m/m	0.5%
	FOMC meeting minutes	–
	New Zealand PPI input q/q	-0.2%
	New Zealand PPI output q/q	-0.3%
19 February	Japan all industries activity m/m	-0.2%
	French CPI m/m	-0.9%
	US weekly jobless claims	305k
	Eurozone consumer confidence	-8
	Philly Fed manufacturing index	8.8
	CB leading index	0.4%
20 February	Japan flash manufacturing PMI	49.7
	German PPI m/m	-0.3%
	French flash manufacturing PMI	49.7
	German flash manufacturing PMI	51.1
	French flash services PMI	49.9
	German flash services PMI	54.3
	Eurozone flash manufacturing PMI	51.6
	Eurozone flash services PMI	53.2
	UK Retail sales m/m	-0.1%
	UK PSNB	-9.5bn
	Canada core retail sales m/m	-0.7%
	Canada retail sales m/m	-0.3%
	US flash  manufacturing PMI	53.7

 

Currencies/Events to Watch this Week

FOMC meeting minutes: A weaker Greenback could definitely look for a rebound should the FOMC’s meeting minutes for February turn out to be hawkish as reflected in the statement. Any signs of concerns in regard to inflation or the stronger dollar could possibly hurt the sentiment and push the Greenback deeper sparking a potential correction in the Dollar’s rally.

Euro: Not much of major market moving events this week with the exception of the CPI and flash PMI numbers from Eurozone. The theme could most likely be Greece, for the single currency and of course any news impacting the Greenback.

UK Jobs report: BoE meeting minutes and monthly jobs report are the major events for this week to watch out for. The Pound has managed to reverse its losses turning out to be one of the strongest currencies last week. A better than expected jobless rate could see the markets start to price in an earlier interest rate hike from the UK.

BoJ Monetary policy: The BoJ monetary policy will be closely scrutinized as the BoJ last week announced that it would halt its monetary expansion for the time being. The markets will be clued to how the BoJ will be able to achieve its 2% inflation target in light of this new development. Expect to see volatility across the Yen pairs this week.

FX Majors Weekly Pivots

	R3	R2	R1	Pivot	S1	S2	S3
EURUSD	1.6361	1.1539	1.1463	1.1366	1.1290	1.1193	1.1117
GBPUSD	1.5706	1.5564	1.548	1.5338	1.5255	1.5113	1.5029
USDCAD	1.2906	1.2803	1.2632	1.2525	1.2354	1.2251	1.2080
USDJPY	122.221	121.353	120.07	119.202	117.919	117.051	115.768
AUDUSD	0.8052	0.7947	0.7854	0.7749	0.7657	0.7551	0.7459