Gone are the days when Trump Presidency was the main fuel for US Dollar rally as the business-tycoon's repeated failures to discuss fiscal & tax policies pushed traders to cash-out from the greenback. With Friday's inaugural speech of the now US President being another disappointment for investors that were eagerly waiting for any strong clues concerning Trump administration's promised policies, the US Dollar Index (I.USDX) posted fourth consecutive weekly decline. On the contrary, the EUR managed to enjoy USD's downturn and confirmation of strong CPI figure while GBP witnessed strongest week since early December on upbeat UK economics and the British PM's try to remove uncertainty surrounding Brexit with her speech. Further, the AUD and the NZD gained additional strength with Chinese data-points giving helping commodities' basket but CAD remained weak as rising US Crude inventories and rig count kept fueling global supply-glut worries. Additionally, JPY remained sluggish with no major details whereas Gold could benefit from the greenback's south-run.
Following a week filled with influential speeches, the present week has many important releases in the form of GDP, PMI and CPI which can fuel Forex market moves. Amongst them, earliest estimations for UK & US GDP are likely to acquire headlines while Flash readings of EU & German PMIs, coupled with Inflation figures from Australia, Japan and New-Zealand can provide intermediate trading opportunities. Additionally, news from EU Membership Court Ruling might also be decisive for EUR & GBP traders. Let's quickly analyze them.
US Data-Points & The First Week Of Trump Presidency
As first speech of the new US President failed to please markets, USD traders are more inclined to look for details relating to GDP & Durable Goods Orders in order to weigh the strength of greenback. Moreover, news-lines from what the new administration is doing to match their promises might also offer intermediate moves to the US Dollar.
While final reading of Q3 2016 GDP portrayed robust picture of US economy with 3.5% growth, Friday's forecast of 2.1% mark for Q4 2016 Advance GDP might become another drag for the global reserve currency. However, the yearly figure would still be strong enough to avoid any extreme declines. Further, monthly release of Durable Goods Orders, also up for Friday, could pose good-news for the USD Bulls with +2.7% order growth against -4.5% prior contraction whereas Core figure seems to flash only a negligible change from 0.6% prior to 0.5% advance.
In addition to these top-tier releases, Tuesday's Existing Home Sales and Thursday's New Home Sales, together with weekly Jobless Claims, are some second-tier data-points that investors might be interested in knowing. While Housing figures are showing slow growth, with 5.54M for Existing Home Sales against 5.61M prior and 585K of New Home Sales versus 592K previous, the Jobless Claims are also expected to inch up a bit from 234K to 247K.
Hence, it becomes safe to say that US data-points are less likely to provide any strong push to the USD, unless being drastically positive, which in-turn shift the market focus on the Trump actions during the week.
If Mr. President manage to discuss NAFTA deal with Canada and Mexico, together with providing any strong clues for his tax & spending policies, chances of the US currency to recover some of its latest losses can't be denied.
Mixed Plays Of EU PMIs, UK GDP & EU Membership Court Ruling
Alike USD, the EUR and GBP also have another good week with leading PMIs from EU and Germany scheduled to portray regional currency's move on Tuesday while UK GDP, up for Thursday, becomes important for Pound traders. Further, the EU Supreme Court's ruling on Tuesday will say whether the UK PM or the parliament has the right to trigger Article 50 discussions with EU.
Looking at PMIs, Manufacturing numbers for both, namely Germany & EU, are likely to hover around previous marks of 55.6 & 54.9 with 55.5 & 54.8 respectively; though, Services indices might please EUR traders with 54.6 & 53.9 figures against 54.3 & 53.7 respective priors. Further, Preliminary reading of Q4 2016 UK GDP becomes the only British thing on the economic calendar. The growth figure, even after likely to soften a bit from 0.6% prior to 0.5%, signals robust 2016 even with Brexit and might even help the GBP to extend its recent upside.
Given the UK PM wins the EU court ruling, chances are higher that her plans relating to individual trade-deals might get strong negotiable stance with EU, which together with good GDP, can help GBPUSD to further rise towards 1.2740-50. However, disappointments may have higher repercussions and can drag the Cable again towards 1.2220.
For EURUSD, 1.0840-50 can continue restricting the pair's up-move in case if PMIs print welcome numbers but weaker figures can reprint sub-1.0570 figure on the chart.
Some More Economics At The EndOther than those mentioned above, inflation figures from Australia, New-Zealand and Japan, coupled with Japanese Trade Balance are some additional data-points that would offer intermediate trades.
Wednesday's AU CPI isn't likely to change from its 0.7% mark but the Quarterly reading of New-Zealand inflation, up for the same day, bears the upbeat forecast of 0.3% mark against 0.2% prior. Furthermore, Japanese Inflation figures are also expected to flash a bit soft decline in CPIs during their Thursday release whereas Trade Balance from the export oriented nation, up for Tuesday, might become a concern for JPY Bulls if the actual print meets 0.22T consensus versus 0.54T prior.
In case if AU inflation fail to provide any clear direction to Aussie, the AUDUSD isn't likely to break 0.7600 and might revisit 0.7430 while NZDUSD may challenge 0.7300 on upbeat inflation marks and needs to worry about 0.7090 in case of otherwise print.
USDJPY may continue to enjoy safe-haven back by targeting 112.40 & 111.30 but positive developments at US & UK, coupled with weaker data-points, may trigger fresh upside of the pair towards 116.00 resistance.
Cheers and Safe Trading,
Anil Panchal