December 19 Daily Forex News and Market Overview


This week marks the final week in terms of high impact economic news data due for release on the calendar this year. On the daily Forex news overview this week, we look at Canada’s upcoming CPI, US GDP and more.

19th December, AtoZForex – On the daily Forex news overview for the week, we also look at Bank of Japan upcoming policy decision.

#1 EU officials meet to discuss EU Brexit negotiations plan

European Union Leaders met on Thursday to form the agenda for Brexit negotiations. The officials agreed to closely collaborate to ensure the United Kingdom does not insist on such a deal that could prompt others to withdraw from the union.

#2 Euro dollar parity expectations for 2017

The EUR might eventually reach parity with the US dollar, following the Federal Reserve’s (Fed) decision to raise the interest rates across the country. Even though the move was widely expected by the markets, FOMC changed outlook regarding the pace of the interest rates relatively impacted the markets. Moreover, unexpectedly strong EUR came as a surprise for financial market participants. The common currency has initially depreciated in the wake of Italy referendum, later being supported by Fed decision on rates.

Opportunuty: Sell EURUSD on rallies

#3 BOJ Policy Rate

The Bank of Japan is expected to hold-off from further stimulus measures, until the middle of 2017, with the election of Donald Trump adding an additional layer of uncertainty to the global economic outlook. The interest rate is therefore expected to be held at -0.10%. According to Izuru Kato, chief economist at Totan Research, “Sharp spikes in the yen against the dollar are unlikely to happen for a while as the Federal Reserve is seen raising rates as expected. This means the BOJ is expected to stand pat,”

Opportunity: Buy USDJPY in retracements

#4 Canada GDP and more

Canada’s economy is forecast to have grown by 0.1% in the last month, compared to 0.3% growth previously recorded. The forecast of a 0.1% growth is potentially the weakest recorded since July, following a rebound in oil prices. The retail sales and consumer price index data are also due on Thursday, both forecast to come at 0.2% and -0.1% respectively. The USDCAD pair remains in a bullish trend and is likely to continue on this path on the back of the strengthening dollar.

Opportunity: Buy USDCAD

#5 German Ifo Business Climate

The business climate in Europe’s largest nation, from the number 1 think-tank in the country is expected to show a tad strengthening in general business sentiment from 110.4 recorded last month to 110.7 this month. Despite the economic crisis in the region, like the Italy situation, the climate is still expected to remain generally favorable.

#6 Why analysts anticipate Eurozone collapse in 2017?

Although Europe has undergone many difficult moments in the past, 2017 year is expected to be crucial for the region. As the continuity of the eurozone can be put under risk. In April and May 2017, France will have presidential elections, whereas the resignation of Matteo Renzi called for general elections in Italy. Both of this countries are now facing an increase in nationalist and anti-globalization movements. Therefore, there is an uncertainty whether these parties will receive enough of support to be elected.

#7 Market doubts over 3 Fed rate hikes in 2017

Senior economist at TDBank James Marple commented that the Fed’s predictions of three rate hikes next year was the only thing that surprised the markets, following the much-anticipated rate hike from the Federal Reserve. According to James Marple, it is unlikely that the Fed’s forecasts become real, given the predictions of last year. The Fed forecasted that it would increase rates four times in 2016, while it actually raised them only once.

#8 Italy is to inject €15bln to rescue Monte dei Paschi

he Italian government is prepared to inject 15 billion euros into its third largest lender, Monte dei Paschi di Siena and other ailing banks. Despite having a rescue plan, it is unlikely that Monte dei Paschi will be able to realize it. The bank needs to raise 5 billion euros by the 31st of December. Otherwise, it will be wound down by the European Central Bank (ECB).

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