Forex Market Outlook For The Week January 9 – 13, 2017

In the first week of 2017, the USD moved up and down in the midst of good as well as bad news. While America’s monthly employment report for December revealed a lower-than-expected job growth, wages rose 2.9 percent on an annualized basis. Further, the economy added only 156,000 positions against the expectation that it would increase by 175,000 and the unemployment rate rose slightly to 4.7 percent from 4.6 percent. The most significant aspect of the December report was the 10 cents growth in average hourly wages to $26, the highest gain since 2009. This indicated the complete recovery of the US labor market. The final report for the year 2016 also comes during a time when the US is on the brink of a presidential change. On his part, the new president Donald Trump has indicated aggressive fiscal measures, which includes higher domestic spending and tax cuts, in order to boost economic growth. The coming week will see the release of the US retail sales, PPI and consumer sentiment data. In general, the market movers for the coming week are as follows:

#1: Australia Retail Sales (01/10/2017 Tuesday 00:30 GMT)

forex market outlookIn Australia, the increase in retail sales on moth-on-month basis was 0.5 percent in October 2016 compared to the 0.6 percent growth in September. Retail sales has grown for the third month in a row. Further, the reading for October was above the market estimates for a 0.3 percent increase. Forecast for November is an increase of 0.4 percent.

#2: China CPI (01/10/2017 Tuesday 1:30 GMT)

In November 2016, China’s Consumer Price Index or CPI, the main inflation gauge, rose 2.3 percent on year-over-year basis, according to the National Bureau of Statistics, up from the 2.1 percent increase recorded in the previous month. On a monthly basis, the CPI increased 0.1 percent in November. The inflation was driven by higher fuel and food prices. It is expected that the CPI will increase by 2.2 percent in the month of December.

#3: UK Manufacturing Production (01/11/2017 Wednesday 9:30 GMT)

On a month-on-month basis, manufacturing production in the UK declined 0.9 percent in October after registering a 0.6 percent increase in September. The reading for the month came in below the market expectations that manufacturing production will increase by 0.2 percent. The decline in factory output in October 2016 was the biggest since February last year. Forecast for November is that manufacturing production will increase by 0.6 percent.

#4: US Crude Oil Inventories (01/11/2017 Wednesday 15:30 GMT)

In the U.S., crude oil stocks dropped sharply towards the end of 2016. The stocks declined by 7 million barrels. However, the stocks of gasoline and distillates jumped as refineries increased production to bring down crude inventories and avoid higher taxes. Crude oil prices rose as Saudi Arabia agreed to OPEC’s request to cut down output after prices declined on US data.

#5: US Unemployment Claims (01/12/2017 Thursday 13:30 GMT)

The number of American people filing claims for jobless benefits dropped last week to nearly a 43-year low. This once again confirmed the continuous improvement being witnessed by the US labor market. The number of jobless claims declined by 28,000, on a seasonally adjusted basis, to 235,000 for the week that ended on December 31, 2016. The weekly jobless claims numbers have remained below the threshold 300,000 mark for 96 weeks in a row. Analysts had expected the jobless claims for the week to come in at 262,000. For the next reporting period, it is expected that the jobless claims will be 266,000.

#6: Federal Reserve Chair Janet Yellen Speaks (01/13/2017 Friday 00:00 GMT)

Federal Reserve Chairperson Janet Yellen is scheduled to speak at the Washington town hall meeting and answer audience questions. The markets are seen to remain volatile during her speeches. This is because traders look out for clues on the direction of interest rates in the future.

#7: China Trade Balance (01/13/2017 Friday 2:00 GMT)

In yuan terms, China’s foreign trade surged in November because of strong domestic and external demand in the short term. Exports increased by 5.9 percent on year over year basis in November, beating market expectations that exports will drop by 1 percent. Imports picked up steam and jumped 13 percent against market expectations for an increase of 5.6 percent. The trade surplus narrowed in November to 298 billion yuan. the nation’s trading value was 2.35 trillion yuan. Forecast for December is that the trade surplus will increase to 345 billion yuan.

#8: US Retail Sales/Core Retail Sales (01/13/2017 Friday 13:30 GMT)

Retail sales in the U.S. expanded in November, but it was less what the analysts had expected. Retail sales remained strong in September and October. In November, retail sales increased just 0.1 percent after increasing 0.6 percent in October. Economists had expected an increase of 0.3 percent. Consumer spending rose amid continued solid gains jobs market and rising wages. This in turn raised consumer’s optimism as regards their finances. Core retail sales, which excludes automobiles and service stations, increased 0.2 percent against analysts’ expectation for an increase of 0.4 percent. Forecast for December is an increase 0.5 percent in both retail sales and core retail sales.

#9: US PPI (01/13/2017 Friday 13:30 GMT)

In the U.S., the producer prices jumped in November because of rising services costs. This is a clear indication that inflationary pressures are on the rise. Finished goods prices rose by 0.4 percent, registering the largest gain since June. Finished goods prices remained flat in October. During the 12 months to October, the PPI has gained 1.3 percent, the biggest rise since November 2014. Forecast for December is that PPI will increase by 0.1 percent.

#10: US UoM Consumer Sentiment (01/13/2017 Friday 15:00 GMT)

The survey carried out by University of Michigan in December showed that consumer’s climate reached the highest level since January 2015. The UoM Consumer Sentiment Index rose to 98 points from 93.8 points in November 2016. Economists had expected the index to increase to 94.3. The surge was attributed to Trump’s surprise victory as the new economic policies planned by the president elect raised consumers’ hopes.

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