Forex Market Outlook for the Week January 11 – 15, 2021

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The US dollar lost ground against most major world currencies through the last quarter of 2020, but global investors were in risk-seeking mode during the first full week of trading in 2021. The second wave of Covid-19, news related to vaccine availability, and stimulus debates weighed down the dollar. In the New Year, Greenback is likely to reclaim its safe-haven status. There are just a few important releases on the economic front in the upcoming week. CPI, retail sales, and jobless claims data from the US stand out. Having said that here is an outlook on these data:

#1: Canada BoC Business Outlook Survey (01/11/2020 Monday 14:30 GMT)

The regional offices of the Bank of Canada interview business leaders of 100 firms four times every year to understand their economic perspectives which helps it in fulfilling its mandate as the central bank. The latest Survey report published on October 19, 2020, indicated that there is an improvement in the business sentiment with the lifting of many containment measures imposed to prevent the spread of the COVID‑19 pandemic. However, the sentiment continued to remain weak across all regions as the businesses expected the rate of recovery in sales to slow down.

#2: Euro Area ECB President Christine Lagarde Speaks (01/11/2020 Monday 14:40 GMT)

Christine Lagarde, President of the European Central Bank, is scheduled to moderate an online panel discussion to be held in Paris as part of the One Panel Summit. Markets often turn volatile during her speeches as traders make an attempt to understand the direction of interest rates.

#3: United Kingdom MPC Member Broadbent Speaks (01/12/2020 Tuesday 10:00 GMT)

forex market outlookBen Broadbent, Deputy Governor of the Bank of England, is scheduled to deliver a speech on “Covid and the composition of spending” at an online event. Traders care because the Monetary Policy Committee (MPC) members vote for or against increasing or cutting the nation’s key interest rates. Further, they often drop subtle clues as regards the direction of interest rates in the future during their public engagements.

#4: Euro Area ECB President Christine Lagarde Speaks (01/13/2020 Wednesday 09:00 GMT)

Christine Lagarde, President of the European Central Bank, is scheduled to at the online event Reuters Next. Markets often turn volatile during her speeches as traders make an attempt to understand the direction of interest rates.

#5: United States CPI (01/13/2020 Wednesday 13:30 GMT)

In the United States, consumer prices rose by 0.2 on a month-over-month basis in November, amid broad-based gains, after remaining unchanged in October. Analysts had expected consumer prices to increase by 0.1 percent. The indexes that registered increases include lodging away from home; household furnishings and operations: recreation; apparel; airline fares; and motor vehicle insurance. However, indexes for used cars and trucks; medical care; and new vehicles declined. The food index declined as a fall in the food-at-home index more than offset the small increase in the food-away-from-home index. The index for energy increased as the gains in indexes for electricity and natural gas offset the drop in the gasoline index.

Forecast for December 2020: 0.4 percent increase expected

#6: United States Core CPI (01/13/2020 Wednesday 13:30 GMT)

In the United States, the consumer prices for all items except food and energy (Core CPI) rose by 0.2 percent in November after remaining unchanged in November.

Forecast for December 2020: 0.2 percent increase expected

#7: United States Unemployment Claims (01/14/2020 Thursday 13:30 GMT)

The number of American people filing for jobless benefits dropped to 787,000 during the week that ended on January 2 after the reading for the previous period was revised upward to 790,000. Analysts had expected the reading for the week to come in at 800,000. However, the claims continued to remain well above the pre-pandemic levels and are likely to remain elevated for some more time as the number of cases of COVID-19 infections continued to increase at a record rate, prompting many states to impose restrictions in response to the outbreak.

Forecast for next week: 783,000

#8: United States Fed Chair Jerome Powell Speaks (01/14/2020 Thursday 17:30 GMT)

Jerome Powell, Federal Reserve Chair, is scheduled to speak at a webinar hosted by Princeton University. Questions from the audience are expected. Markets often turn volatile during his speeches as traders make an attempt to understand the direction of interest rates and questions can lead to unscripted answers.

#9: United States Core Retail Sales (01/15/2020 Friday 13:30 GMT)

In the United States, core retail sales (excludes autos) decreased 0.90 percent on a month-over-month basis in November and missed analysts’ expectations for a 0.1 percent increase.

Forecast for December 2020: 0.1 percent decrease expected

#10: United States Retail Sales (01/15/2020 Friday 13:30 GMT)

In the United States, retail sales fell by 1.1 percent on a month-on-month basis in November after the reading for the prior month was revised to a 0.1 percent fall in October. Analysts had expected retail sales to fall by 0.3 percent in November. With this, the retail trade has declined for the second month in a row. Consumers pulled back as a result of the surge in the number of coronavirus cases and a fall in income. Further, unemployment benefits are set to expire. Sales fell at clothing stores; food services as well as drinking places; electronics as well as appliance stores; gasoline stations; and motor vehicles as well as spare parts dealers. Declines in sales were also reported by furniture stores; general merchandise stores; personal and health care stores; sporting goods, musical instruments, hobby, and book stores; and miscellaneous stores. Increases in sales were registered by food as well as beverage stores and building material dealers.

Forecast for 2020: 0.0 percent

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