While lack of economics restricted global market moves during last week, upbeat GDP and housing-market details from US helped the US Dollar Index (I.USDX) to enter final days of 2016 with noticeable gains. However, positive German data-points and hawkish remarks from BoJ Governor helped EUR and JPY to witness pullback whereas commodity currencies, namely AUD, NZD and CAD, remained weak due to stronger greenback and a surprise addition in US Crude stockpile figure. Furthermore, GBP couldn't reflect GDP growth as uncertainty surrounding Article 50 discussion kept hurting the UK currency while absence of safe-haven demand continued dragging Gold prices to south.
With all the glory and gloom of historical events that took place in 2016, the crucial year is at the door-step of closure with fewer economics marking their presence to offer intermediate trading opportunities. Amongst them, US CB Consumer Confidence, Pending Home Sales and Chicago PMI may take the lead while Japanese Inflation and Unemployment figures could help determine immediate JPY moves. It should also be noted that most of the major economic markets are close on Monday. Let's discuss them briefly.
US, The Only Economic Calendar To Rule Market Moves
Ever since the Donald Trump won US Presidential election, global markets have been more optimistic and US financial platforms are skyrocketing but the year-end moves have recently affected the greenback. However, with comparatively stronger economic calendar, US markets can keep offering liquid trading opportunities to those who don't want to celebrate holidays and keep trading open during the upcoming week.
Amongst scheduled data-points, monthly release of Conference Board's (CB) US Consumer Confidence Index gains highest attention. The consumer sentiment gauge rallied to the highest in nearly 10 years during its previous release by printing 107.10 and is expected to stretch its north-run a bit longer by flashing 108.90 mark on Tuesday. It's no secret that US economy has been performing very well and the same helped Fed to announce second rate-hike in nearly a year's time, which in-turn signals brighter chances for the consumer confidence index to either meet or surpass forecast and help US Dollar to extend its upside.
In addition to Consumer Confidence, Wednesday's Pending Home Sales, Thursday's Goods Trade Balance & Jobless Claims and the Friday's Chicago PMI are some other data-points that require traders' watch. While Pending Home Sales and Goods Trade Balance both signal upbeat sentiments for US Dollar, with 0.6% and -61.5B forecasts against +0.1% & -61.9B respective priors, Jobless Claims and Chicago PMI suggest somewhat weaker prints of 277K and 56.5 versus 275K & 57.6 earlier stats.
Given the year-end holiday season, coupled with fewer economics on hand, the Forex market is less likely to witness any big moves during the upcoming week. However, scheduled US releases can keep helping the greenback towards closing the year 2016 with noticeable gains.
In case if data-points flash negative numbers, chances of experiencing fewer damages to US Dollar are higher as the macro-view for world's largest economy remains strong with Donald Trump victory and recent Fed rate-hikes.
Japanese And European Data-Points
Even as US economic calendar is likely to rule this week's market moves, Japanese Inflation, Industrial Production, Retail Sales and Unemployment figures, together with Spanish Flash CPI, are additional data-points to help forecast JPY and EUR moves.
During late-Monday, or early Tuesday in some countries, Japanese Tokyo Core CPI and Unemployment Rate are likely to maintain their previous -0.4% and 3.0% while Tuesday's Industrial Production & Retail Sales have some good figures for JPY traders as Industrial Production is likely to grow by 1.8% from 0.0% earlier while Retail Sales is expected to register +0.9% expansion against -0.2% prior. Considering the recent recovery in JPY, upbeat Industrial Production and Retail Sales may help USDJPY to revisit sub-115.00 area while an unexpectedly weaker print may further fuel the pair towards the crucial 118.50 – 119.00 region.
At European front, Flash release of Spanish CPI, up for release on Friday, becomes the only figures to help determine EUR moves. The inflation gauge for one of the crucial EU country is expected to test the highest figures in more than three years with +0.9% mark versus +0.7% earlier. Should the actual Spanish Inflation print either matches or surpasses consensus, chances of recent EURUSD pullback to extend towards 1.5650-60 can't be denied. On the contrary, break of 1.0350 support can quickly fetch the quote to 1.0260-50 region while its following downside beneath the same may find thin liquidity as an obstacle.
To sum up, global markets may keep maintaining recent calm attitude with holiday season at the door-step. However, few economics may help forecast USD, EUR and JPY moves while Crude Inventories can support predicting near-term trend of the CAD and some other commodity currencies, like AUD and NZD.
Cheers and Safe Trading,
Anil Panchal