Weekly Forex Forecast: Dec 22 – 25

The New Zealand Dollar was the top performing currency last week closing with gains of 0.20%. The Kiwi came out tops with not much of fundamentals going in its favor. While most of the commodity risk currencies came under pressure last week, the NZD outperformed its peers. The US Dollar was the second best currency last week. The Dollar gained as the US Federal Reserve raised interest rates by 25bps and signaling a gradual rate hike in 2016.

The British Pound was the weakest, losing -2.18% for the week despite a better than expected retail sales numbers and the UK’s unemployment rate falling to 5.20%. It was wages which rose less than expected at 2.40%. Wages was a big concern for the BoE where last week, BoE member, Shafik noted that unless there was strong evidence of UK wages growing, rate hikes would likely to remain at the current levels. The Canadian dollar lost -1.45% for the week led by weak inflation and GDP numbers and falling Oil prices.

Fundamentals for the Week 21/12 – 25/12

Date	Time	Currency	Detail	Forecast	Previous
21-Dec	04:00	NZD	Credit Card Spending y/y		7.80%
	06:30	JPY	All Industries Activity m/m	0.90%	-0.20%
	07:00	JPY	BOJ Monthly Report
	09:00	EUR	German PPI m/m	-0.20%	-0.40%
	13:00	EUR	German Buba Monthly Report
		GBP	CBI Realized Sales	22	7
	17:00	EUR	Consumer Confidence	-6	-6
22-Dec	02:05	GBP	GfK Consumer Confidence	1	1
	04:00	CNY	CB Leading Index m/m		0.60%
	09:00	CHF	Trade Balance	3.82B	4.16B
		EUR	German Import Prices m/m	0.20%	-0.30%
		EUR	GfK German Consumer Climate	9.3	9.3
	11:30	GBP	Public Sector Net Borrowing	11.9B	7.5B
	15:30	USD	Final GDP q/q	1.90%	2.10%
		USD	Final GDP Price Index q/q	1.30%	1.30%
	16:00	EUR	Belgian NBB Business Climate	-4	-3.9
		USD	HPI m/m	0.40%	0.80%
	17:00	USD	Existing Home Sales	5.32M	5.36M
		USD	Richmond Manufacturing Index	-1	-3
	23:45	NZD	Trade Balance	-812M	-963M
23-Dec	09:45	EUR	French Consumer Spending m/m	0.20%	-0.70%
	10:00	CHF	KOF Economic Barometer	98.9	97.9
	11:30	GBP	Current Account	-21.3B	-16.8B
		GBP	Final GDP q/q	0.50%	0.50%
		GBP	Index of Services 3m/3m	0.60%	0.70%
		GBP	Revised Business Investment q/q	2.20%	2.20%
	12:00	EUR	Italian Retail Sales m/m	0.30%	-0.10%
	15:30	CAD	Core Retail Sales m/m		-0.50%
		CAD	GDP m/m		-0.50%
		CAD	Retail Sales m/m		-0.50%
		USD	Core Durable Goods Orders m/m	0.10%	0.50%
		USD	Core PCE Price Index m/m	0.10%	0.00%
		USD	Durable Goods Orders m/m	-0.60%	3.00%
		USD	Personal Spending m/m	0.30%	0.10%
		USD	Personal Income m/m	0.20%	0.40%
	17:00	USD	New Home Sales	507K	495K
		USD	Revised UoM Consumer Sentiment	92.1	91.8
		USD	Revised UoM Inflation Expectations		2.60%
	17:30	USD	Crude Oil Inventories		4.8M
24-Dec	01:00	AUD	CB Leading Index m/m		-0.10%
	01:50	JPY	Monetary Policy Meeting Minutes
	11:30	GBP	BBA Mortgage Approvals	46.2K	45.4K
	15:30	USD	Unemployment Claims	270K	271K
25-Dec	01:30	JPY	Household Spending y/y	-2.10%	-2.40%
		JPY	Tokyo Core CPI y/y	0.10%	0.00%
		JPY	National Core CPI y/y	0.00%	-0.10%
		JPY	Unemployment Rate	3.20%	3.10%
	01:50	JPY	SPPI y/y	0.40%	0.50%
	07:00	JPY	BOJ Core CPI y/y	1.20%	1.20%
		JPY	Housing Starts y/y	0.90%	-2.50%

Time: GMT+2

Currencies/Events to Watch this Week

The week ahead will mark the start of the holiday season with most of the institutional banks closing business on account of Christmas. Data is largely limited and the holiday-shortened week will see the markets wind up by Wednesday with most of the markets across the globe being closed from Thursday onwards. Most of the US and Canadian data will be released on Wednesday, 23^rd December ahead of the market close for the remainder of the week.

From Asia-Pacific region, data from Australia is limited to the CB leading index. However, this data is unlikely to see any big moves coming into the markets. On December 21st, New Zealand trade balance data will be released and credit card spending. Expect some moves on credit card spending data which saw the Kiwi bounce strongly during the last release.

It will be a somewhat short but busy week for the Eurozone. Monday’s data includes German PPI numbers followed by Tuesday’s German import prices and Gfk consumer expectations. However, despite the data, it is unlikely to see any significant moves in the market this coming week.

The British Pound will be looking to the final quarterly revised GDP which currently stands at 0.50% at the second revision. An upside surprise to see the British Pound book some gains, but it unlikely to impact the markets much.

On Tuesday, 22nd December the US final GDP data will be released. Expectations are slightly dovish with the GDP expected to be revised down to 1.90% against second estimates of 2.10%. Canada’s GDP numbers will be released on 23rd December. As of the previous month, Canadian economy contracted -0.50% and puts the economy on the risk of a technical recession. Core retail sales numbers will also be released at the same time while the US durable goods orders are expected to increase 0.10% after a 0.50% increase a month ago.