While year-end doldrums curbed market moves during early last-week, FOMC minutes disappointed greenback traders when it indicated an expected upside risk to the US Inflation due to Donald Trump's fiscal policies. The resultant weakness stretched USD correction towards posting second consecutive weekly loss even if the Average Earnings grew quite positively. Moving on, Chinese actions to safeguard its currency ahead of Lunar New-Year and Trump presidency-start, together with upbeat economics, helped AUD, NZD and CAD to extend their latest upsides wherein CAD got additional strength from Canadian Trade Balance and Job numbers. Furthermore, Gold fueled its upward trajectory to four-week highs but Crude failed to sustain its north-run on concerns that Non-OPEC producers may keep inflating global supply-glut of the Oil market. Additionally, EUR remained strong with CPI and PMI outcomes while GBP failed to portray noticeable strength of headline PMIs as political uncertainty ahead of Article 50 discussion kept dragging the Pound to south.
Looking towards the present week, we have fewer economic data-points that can offer magnified market moves. Though, consumer-centric figures from Australia and US, together with Chinese Inflation and UK Manufacturing Production, may provide intermediate trade opportunities. Further, Trade balance numbers from UK and China, in addition to US Jobless Claims and PPI, are some second-tier data-points that demands traders' attention. Let us examine them in detail.
US Retail Sales & Consumer Sentiment To Be In Headlines
With December-month consumer-centric details on card, USD Bulls are likely to analyze how strong consumer buying was there during the last month of 2016 and whether the same can keep favoring the Fed's intention to provide three rate-hikes in the present-year. Additionally, Jobless Claims for the first-week of 2017 also gains importance as recent labor market figures were mostly mixed and failed to provide any clear direction to the US Dollar.
As it can be inferred from aforementioned chart, US Retail Sales has been declining since last three months and the yearly figure also slowed-down in its latest release. Considering the year-end buying season, forecast concerning Friday's outcome of Retail Sales shows an expected growth of 0.5% from its previous 0.1% while Core Retail Sales is also likely to rise by 0.5% mark compared to its 0.2% prior. Another such detail, namely
Prelim UoM Consumer Sentiment, up for Friday, may as well please greenback buyers with 98.6 versus upwardly revised 98.2 prior. Moving forward, monthly announcement of US PPI & Core PPI, scheduled for Friday release, and the Thursday's Weekly Jobless Claims are some other data-points that could direct near-term USD moves. While PPI & Core PPI are both likely to flash soft figures of 0.1% and 0.3% respectively against their 0.4% prior, Jobless Claims may inch-up to 266K against 235K posted last-week.
In the event of few data-points on hand, Retail Sales numbers may please greenback Bulls due to year-end buying. However, sluggish PPI and Jobless figures may keep dragging the US Dollar towards south in case of any surprises by consumer-centric figures.
Moreover, some informal speeches by few FOMC members would also be watched carefully and any more clues relating to inflation's upside risk due to Trump Presidency may continue being negative for US currency.
However, EURUSD's failure to surpass short-term descending trend-line, at 1.0625 now, indicate the pair's weakness towards revisiting 1.0350-40 support-area. Should the quote manage to break 1.0625, the 1.0650 and the 1.0710 are likely following resistances to appear on the chart.
GBP Traders Should Be Present On Wednesday
Wednesday becomes an important day of the week for UK economic-calendar as British Manufacturing & Industrial Production, coupled with Goods Trade Balance, are scheduled for release on the same-day. Market consensus shows 0.6% advance in UK Manufacturing Production and 0.8% growth of the Industrial Production against their -0.9% and -1.3% respective priors. Further, Goods Trade Balance points to a higher deficit of -11.2B versus -9.7B earlier figure.
Mixed releases and on-going uncertainty about Article 50 negotiation, coupled with GBPUSD's recent break of 1.2200 support, keep pointing the pair towards south to sub-1.2000 region. Though, extremely optimistic data-points may again fuel the quote to challenge 1.2430 and the 1.2550 resistances./>
AU Retail Sales, Chinese Inflation & Trade Balance Are The Rest
Other than the US & UK data-points, Tuesday's Australian Retail Sales and Chinese Inflation figures, followed by Friday's Chinese Trade Balance, are the rest of data-points that should be observed by Forex traders.
Australian Retail Sales figure is again expected to flash a soft number of 0.4% versus 0.5% prior while Chinese CPI may weaken a bit to 2.2% from 2.3% earlier mark. However, PPI from the Dragon Nation, China, could please commodity traders with the highest growth of 4.6% in nearly five-years compared to 3.3% announced in last-month. Further, China's Trade Balance is also likely to post upbeat figure of 345B surplus compared to its 298B prior.
Given the year-end buying propels AU Retail Sales to surpass forecasts and the Chinese data-points follow recent suit of positive outcomes, chances of the AUDUSD to revisit 0.7500 – 0.7510 resistance-zone, comprising 100-day & 200-day SMA, can't be denied. In case of any adversity 0.7220 and the 0.7160 become important for Aussie traders to watch.
Cheers and Safe Trading,
Anil Panchal