We are pleased to share with you what is going to affect market movements this week. Get insights about market trends with HotForex’s 8-12 January Weekly Forex Market Forecast.
8 January, HotForex –The start of the year 2018 is off to a bang with the “snow bomb” and freeze on the East Coast of the U.S., along with the start of the MiFID financial regulation in Europe and fresh record highs right out of the gate on equities around the globe. That’s kept yields pressured higher, but continues to do few favors for the dollar, even as gold and Bitcoin rebounded. Headline U.S. nonfarm payrolls disappointed elevated expectations, but the guts of the report remained solid.
8-12 January Weekly Forex Market Forecast
United States: The economic calendar will home in on inflation data and retail sales following the miss on the headline December payrolls print last week. Consumer credit kicks off the week (Monday) with an $18.0 bln increase forecast for November vs $20.5 bln previously.
Second tier NFIB small business optimism and JOLTS job openings (Tuesday)are on tap next. MBA mortgage market data (Wednesday) is due, along with import prices seen +0.2% in December and export prices flat. Wholesale sales may increase 0.8% in November, while inventories rise 0.7% (Wednesday), with EIA energy inventory data on deck as well.
Headline PPI may dip 0.1% in December vs 0.4% (Thursday), while core is expected at 0.2% vs 0.1%. Initial jobless claims are projected (Thursday) to drop 15k to 235k for the January 6 week and the Treasury budget gap is set to widen to -$52.0 bln in December vs -$28 bln a year-ago.
Headline CPI is forecast to increase 0.2% in December vs 0.4% (Friday), while core is set to rise 0.2% vs 0.1% — leaving core y/y at 1.7%. Also on tap are December retail sales, which is forecast to rise 0.3% vs 0.8%, while increasing 0.4% ex-auto. Lastly is business inventories that should rise 0.3% in November vs -0.1%.
Fedspeak resumes in full force with a trio of Atlanta’s Bostic, SF’s Williams and Boston’s Rosengren (Monday). Bostic will be speaking on the economy and policy, while the other two will be taking part in a Brookings event on the 2% inflation target.
Minneapolis Fed’s Kashkari will participate in a Q&A session (Tuesday), followed by Chicago’s Evans. St. Louis’s Bullard and Dallas’s Kaplan appear (Wednesday), who will be speaking on the economy and policy. NY Fed’s Dudley will deliver a keynote address on the 2018 economic outlook (Thursday) and Rosengren will return (Friday) to discuss the outlook as well.
Canada: The final bit of economic data are due this week before the Bank of Canada’s (BoC) January 17announcement and Monetary Policy Report next week. The calendar is front-loaded, with the BoC’s business outlook survey for Q4 due Monday and December housing starts due Tuesday. Building permits are out Wednesday. The decidedly second tier November new home price index and December Teranet National HPI are scheduled for Thursday and Friday, respectively. The BoC’s business outlook survey will finalize expectations for the BoC next week.
Strong growth and still low inflation remain the main features of the Eurozone economy, and with the ECB still glossing over the cracks of the Eurozone system long yields remain low also in peripheral countries. Political risks will continue to dominate over the next couple of months as the Italian general election on March 4 comes into view, Germany’s struggle to find a stable government continues and Brexit talks go into the second round.
German Nov manufacturing orders (Monday) are seen down -0.3% m/m , but after a rise of 0.5% m/m in the previous month. and with a still strong trend suggesting ongoing robust demand in the manufacturing sector. Eurozone ESI Economic Confidence is seen picking up slightly to 114.8 from 114.6, after the preliminary consumer confidence data came in higher than anticipated and PMI readings also improved at the end of last year. Germany will release a preliminary estimate for full year 2017 GDP (Thursday).
Growth last year was much stronger than anticipated and the output gap is closing faster than expected, with PMI reports already suggesting that the manufacturing sector is running into capacity constraints, thus backing expectations for a gradual change in the ECB’s forward guidance in coming months, with the current QE program likely to be the last and net asset purchases expected to be phased out in the last quarter of the year.
Ahead of the full year GDP numbers. The calendar also holds German trade data (Tuesday) and French production numbers (Wednesday) for November, as well as Italian and overall Eurozone production data (Wednesday) with the latter seen up 0.5% m/m. Growth remains robust, but so far inflation data has failed to move any closer to target and final December HICP readings from France and Spain are expected to confirm preliminary readings and not bring any surprises.
Sterling markets have been lacking strong leads so far this year. Unexpected weakness in the December manufacturing and construction PMI surveys were offset by a firmer than expected PMI reading for the dominant service sector. The ONS stats office reported an encouraging tick higher in UK productivity, though to little impact. Brexit-related news or developments, meanwhile, have been thin so soon after the holiday period.
Formal negotiations with the EU on a post-Brexit trading relationship are due to start in March.This week’s UK calendar is fairly quiet, highlighted by the private BRC retail sales survey for December (Tuesday) along with November production and trade data (Wednesday).
The BoE MPC’s next policy meeting will take place on February 7th-8th, where a no change decision is widely anticipated. The BoE will then also publish its latest quarterly inflation report, with updated growth and inflation projections.
Japan is on holiday Monday observing Coming of Age Day. December consumer confidence (Tuesday) is expected to improve to 45.5 from 44.9. November current account data (Friday) should show the surplus narrowing to JPY 1,900 bln from 2,176 bln.
December CPI and PPI are due (Wednesday) with the former seen rising to a 2.0% y/y pace from 1.7%, while the latter slows to 5.0% y/y from 5.8% previously. December loan growth and new yuan loans are also tentatively due (Wednesday) with the latter forecast at CNY 900.0 bln from 1,120 bln in November. The December trade report (Friday) should reveal a narrowed surplus of $37.0 bln from $40.2 bln in November.
Australia building approvals (Tuesday) are expected to dip 0.5% in November after the 0.9% gain in October. ANZ job ads for December are also due Tuesday. November retail sales (Thursday) are seen rising 0.3% after the 0.5% increases in October. The Reserve Bank of Australia’s docket is clear this week. Indeed, the Bank’s event schedule is empty until the policy meeting on February 6. No change to the current 1.50% setting for the cash rate is expected.
This article about 8-12 January Weekly Forex Market Forecast was written by Andria Pichidi, Market Analyst at HotForex. The provided article is a general marketing communication for information purposes only. It does not constitute an independent investment research. Nothing in this communication contains an investment advice or an investment recommendation. It also does not contain a solicitation for the purpose of buying or selling of any financial instrument.
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