Forex Market Outlook For The Week January 2 – 6, 2017

In the U.S., Donald Trump who was instrumental in inspiring the U.S. dollar and equities to rally in the last couple of months of this year is scheduled to take charge as the new president in January. The U.S. dollar lost a little bit of ground towards the close of last week, but registered gains for the fourth straight against a basket of major world currencies. The dollar index, which measures the US dollar against six major rivals, rose about 3.7 percent in 2016. Expectation that interest rates will be increased in 2017 also contributed to the gains. Several analysts are of the opinion that uptrend of the US dollar remains intact.

forex market outlookWith the holiday period coming to an end by the last week of December, the economic calendar looks more packed even though many of the major markets will remain closed on January 2, 2017. The US and the Eurozone have the busiest calendars this week, while China and the UK are also set to release the PMI figures.

#1: China Caixin Manufacturing PMI (01/03/2017 Tuesday 1:45 GMT)

In China, the manufacturing purchase managers’ index declined to 50.90 in the month of November from a reading of 51.20 recorded in the month of October last year. The reading is expected to come in at the same level of 50.90 for the month of November.

#2: UK Manufacturing PMI (01/03/2017 Tuesday 9:30 GMT)

In the UK, the manufacturing PMI dropped to the level of 53.40 in November from 54.30 established in the previous month. It is expected that the index will remain at the same level 53.30 in the month of December as well.

#3: New Zealand GDT Price Index (01/03/2017 Tuesday 12:00 GMT)

In the auction on December 20, 2016, the dairy price index fell to -0.5 percent after recording a jump of 3.5 percent in the auction held on December 6, 2016.

#4: US ISM Manufacturing PMI (01/03/2017 Tuesday 15:00 GMT)

The manufacturing PMI reported by the Institute for Supply Management (ISM) increased to 53.2 in the month of November from the reading of 51.9 recorded in the previous month. The reading came in above the analysts’ expectation of 52.2 and recorded the highest level in five months on the back of stronger new order receipts, production increase and raw material inventories improvement. However, the growth in employment slowed down. It is expected that the index will come in at 53.7 in the month December.

#5: UK Construction PMI (01/04/2017 Wednesday 9:30 GMT)

In the United Kingdom, the construction PMI rose to 52.80 in November from 52.60 in the previous month. Forecast for December is 52.6.

#6: US FOMC Meeting Minutes (0104/2017 Wednesday 19:00 GMT)

The FOMC meeting minutes provides a detailed account of the most recent meeting, indicating in-depth insights into the country’s financial and economic conditions that influenced the voting to decide interest rates. Traders look for clues on future interest rate decisions.

#7: UK Services PMI (01/05/2017 Thursday 9:30 GMT)

In the month of November, the services PMI in the UK rose to 55.20 points from 54.50 points recorded in the month of October. Forecast for the month of December is 54.8.

#8: US ADP Non Farm Employment Change (01/05/2017 Thursday 13:15 GMT)

The US added just 15,100 jobs in the month of November, according to data released by the ADP Research Institute. Hiring was the highest in auto dealerships and restaurant franchises, while hiring by business service franchises declined by a thousand. The number of private sector jobs increased by 216,000 in November from October. Forecast for December is an employment increase of 171,000.

#9: US Unemployment Claims (01/05/2017 Thursday 13:30 GMT)

The number of American people filing for jobless benefits dropped by 10,000 to 265,0000 during the week that ended on December 24, 2016 from 275,000 reported for the previous week. The reading came in slightly above the market expectation of 264,000. With this the initial jobless claims have remained below the threshold level of 300,000 for 95 straight weeks. Forecast for the next reporting period is 262,000.

#10: ISM Non-Manufacturing PMI (01/05/2017 Thursday 15:00 GMT)

In the US, the ISM Non-Manufacturing PMI recorded an increase to 57.2 in the month of November from the reading on 54.8 for the previous month. The reading beat market expectations of 55.4. This is the highest reading for the index since October 2015. Increased business and employment activity contributed to the gains. Growth in new orders slowed down in November. Forecast for December is 56.6.

#11: US Crude Oil Inventories (01/05/2017 Thursday 16:00 GMT)

In the US, the crude oil stocks increased by 614,000 barrels by the end of the week dated December 23, 2016 following an increase of 225,600 barrels in the previous week. Market expectation was that crude oil stocks would fall by 2,000,000 barrels. Gasoline stocks dropped by 1,593,000 barrels against expectations of an increase by 1,320,000 barrels.

#12: Canada Employment Change/Unemployment Rate (01/06/2017 Friday 13:30 GMT)

Canada added 10,700 jobs in November against market expectations that there will be a decline of 20,000 jobs. While part-time employment rose by 19,400, full-time employment dropped by 8,700.

Meanwhile, Canada’s unemployment rate declined to 6.8 percent in November after remaining steady at 7.0 percent for the previous three months. The reading beat market expectations that unemployment rate will come in at 7.0 percent for the month of November. This is the lowest jobless rate in the last five months.

Forecast for December 2016: a decrease in the number of jobs by 5,100 and an increase in unemployment rate to 6.9 percent.

#13: Canada Balance of Trade (01/06/2017 Friday 13:30 GMT)

In October, Canada reported a trade deficit of C$1.1 billion after the shortfall for the previous month was revised upward to C$4.38 billion. Analysts expected a trade deficit of C$2 billion. Trade deficit for October was the lowest since January this year. Exports fell by 6.3 percent and imports rose 0.5 by percent. Forecast for November is that the trade deficit will increase to C$1.6 billion.

#14: US Average Hourly Earnings (01/06/2017 Friday 13:30 GMT)

In the US, average hourly earnings declined by 0.1 percent (or 3 cents) to $25.89 in November from the previous month. Wages fell for the first time since December 2014, beating market expectations that average hourly earnings would increase by 0.2 percent. Forecast for December is that the average hourly earnings will increase by 0.3 percent.

#15: US Non-farm Employment Change (01/06/2017 Friday 13:30 GMT)

In November, hiring by employers in the US went on at a steady rate and the jobless rate dropped to the lowest level in as many as nine years. This broadly upbeat performance could mask some of labor market’s underlying soft spots. Non-farm jobs rose by 178,000 (because of the employment gains in the health care, professional and business services) compared to the downwardly revised 142,000 jobs increase in October. The reading for November was also above the market expectation of 175,000. Forecast for December is that 175,000 jobs would be added.

#16: US Unemployment Rate (01/06/2017 Friday 13:30 GMT)

Unemployment rate in the US fell to 4.6 percent in the month of November from the 4.9 percent recorded in the previous month. The reading came in well below the market expectation that the unemployment rate will be steady at 4.9 percent. The reading for November was the lowest since August 2007. Unemployed persons in the US declined by 387,000 to 7,400,000.

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