Forex Market Outlook For The Week February 10 – 14, 2020

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Last week, the US dollar registered gains against its major counterparts because of strong jobs data. According to the report, the U.S. labor market put up a strong performance during January. In the upcoming week, the United States is scheduled to release inflation and retail sales data. Important economic data scheduled for release from other parts of the world include the U.K. GDP numbers and New Zealand interest rate decision. Having said that here is an outlook on a few key releases:

#1: United Kingdom Preliminary GDP (02/11/2020 Tuesday 09:30 GMT)

In the United Kingdom, GDP growth for the September quarter of last year was revised slightly upward to 0.4 percent from the preliminary estimate of 0.3 percent reported earlier. The revision was done because the net trade made a larger than expected positive contribution. Household consumption also supported GDP growth. However, government expenditure and gross capital formation contributed negatively to the country’s economic growth.

Forecast for the December quarter of 2019: 0.00 percent

#2: Euro Area ECB President Christine Lagarde Speaks (02/11/2020 Tuesday 14:00 GMT)

forex market outlookChristine Lagarde, President of the European Central Bank, is scheduled to deliver opening remarks before the European Parliament in Strasbourg at the presentation of the 2018 ECB Annual Report. Markets often turn volatile during her speeches as traders make an attempt to understand the direction of interest rates.

#3: United States Fed Chair Powell Testifies (02/11/2020 Tuesday 15:00 GMT)

In Washington DC, Jerome Powell, Federal Reserve Chair, is scheduled to testify before the House Financial Services Committee on the Semiannual Monetary Policy Report. The testimony has two parts: reading a prepared statement and answering questions that the committee raises. As the questions are not revealed beforehand, they can lead to unscripted answers. This often causes heavy market volatility.

#4: United Kingdom BoE Governor Mark Carney Speaks (02/11/2020 15:35 GMT)

Mark Carney, Governor of the Bank of England, is scheduled to testify before the House of Lords Economic Affairs Committee in London. Markets often turn volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates.

#5: New Zealand RBNZ Official Cash Rate (02/12/2020 Wednesday 01:00 GMT)

In the meeting held in November last year, the Reserve Bank of New Zealand unexpectedly decided to leave its official cash rate unchanged at the record low level of 1.0 percent. This surprised the markets as analysts expected a 25 basis points rate cut. After the announcement, policymakers said that the prevailing economic situation did not warrant a rate cut. They also noted that they will continue to monitor the economic developments and be prepared for any quick action. The Monetary Policy Committee of the central bank added that the interest rates need to remain at the current low levels for a longer period. According to them, it is essential for inflation to reach the mid-point of the target range and employment to remain around the maximum sustainable level. New Zealand has lowered the interest rate a few times over the last year from the 1.75 percent level to reach the current level after keeping it on hold for more than two years.

Forecast for February 2020: 1.00 percent

#6: New Zealand RBNZ Monetary Policy Statement (02/12/2020 Wednesday 01:00 GMT)

Released on a quarterly basis, the Reserve Bank of New Zealand is mandated to provide details as to how they propose to achieve the inflation targets and formulate as well as implement monetary policy over the next five years. In addition, the central bank is expected to provide information as to how the monetary policy was implemented since the release of the last statement. Further, the statement provides valuable insight into the central bank’s view of inflation and economic condition.

#7: New Zealand RBNZ Rate Statement (02/12/2020 Wednesday 01:00 GMT)

The Reserve Bank of New Zealand releases the Rate Statement seven times in a year. The central bank uses it as a tool to communicate with investors as regards the monetary policy. It provides the outcome of their monetary policy committee members’ decision on setting interest rates and commentary on the economic conditions that impacted their decision. More importantly, it discusses the country’s economic outlook and provides clues on future decisions.

#8: New Zealand RBNZ Press Conference (02/12/2020 Wednesday 02:00 GMT)

The Governor of the Reserve Bank of New Zealand holds a press conference one hour after the announcement of the Official Cash Rate. The duration of the press conference is approximately 30 minutes and has two parts. In the first part, the Governor reads out a prepared statement. In the second part, he answers questions from the press. As the questions can lead to answers that are not scripted, heavy market volatility can be expected.

#9: United States Federal Reserve Chair Jerome Powell Testifies (02/12/2020 Wednesday 15:00 GMT)

Jerome Powell, Federal Reserve Chair, is scheduled to testify before the Senate Banking Committee on the Semiannual Monetary Policy Report in Washington DC. The testimony is given in two parts. In the first part, he reads out a prepared statement. In the second part, he answers questions asked by the committee members. As the Federal Reserve Chair does not know the questions beforehand, they can lead to unscripted answers. This causes heavy market volatility.

#10: New Zealand RBNZ Governor Adrian Orr Speaks (02/12/2020 Wednesday 19:10 GMT)

Adrian Orr, Governor of the Reserve Bank of New Zealand, is scheduled to testify before Finance and Expenditure Select Committee on the Monetary Policy Statement in Wellington. Markets often remain volatile during his speeches as traders make an attempt to understand the direction of interest rates.

#11: Australia RBA Governor Philip Lowe Speaks (02/13/2020 Thursday 00:15 GMT)

Philip Lowe, Governor of the Reserve Bank of Australia, is scheduled to participate in a panel discussion in Melbourne at the 7th Australia-Canada Economic Leadership Forum. Questions are expected from the audience. Markets often remain volatile during his speeches as traders make an attempt to understand the direction of interest rates.

#12: United States CPI (02/13/2020 Thursday 13:30 GMT)

In the United States, consumer prices rose by 0.2 percent on a month-on-month basis in December 2019, following the 0.3 percent increase in the previous month. The reading for the month came in slightly below analysts’ expectations of 0.3 percent. Prices of gasoline, medical care, and shelter rose.

Forecast for January 2020: Consumer prices are expected to increase by 0.2 percent

#13: United States Core CPI (02/13/2020 Thursday 13:30 GMT)

In the United States, the core inflation rate, which excludes the volatile energy and food prices, edged up 0.1 percent in December 2019 after rising by 0.2 percent in November 2019.

Forecast for January 2020: Core CPI is expected to increase by 0.2 percent

#14: United States Retail Sales (02/13/2020 Friday 13:30 GMT)

In the United States, retail trade rose by 0.3 percent on a month-over-month basis in December 2019 after the reading for the prior month was revised upward to a gain of 0.3 percent. The data for December matched with analysts’ expectations. Sales of food and drinks, electronics and appliances, and clothes increased. Gasoline sales also rose faster. On the other hand, motor vehicle sales declined.

Forecast for January 2020: 0.3 percent increase expected

#15: United States Core Retail Sales (02/13/2020 Friday 13:30 GMT)

In the United States, core retail sales, which exclude autos, rose by 0.7 percent in December 2019. This is by far the largest increase ever since July 2019. Retail sales recovered from the flat reading reported in November 2019.

Forecast for January 2020: 0.3 percent increase expected

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