Forex Market Outlook For The Week January 13 – 17, 2020

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The dust settled down after the release of the Non-Farm Payrolls report. The reading came in below analysts’ expectations as only 145,000 were added and wage growth slowed to 2.9 percent. The greenback, however, shrugged off the disappointment as other data were upbeat. Meanwhile, the United States and Iran maintained a very high level of rhetoric as regards the killing of Iranian Major General Qasem Soleimani of the Islamic Revolutionary Guard Corps (IRGC) in a targeted drone strike by the United States. The markets turned jittery but soon calmed down as fears of a war between the US and Iran faded and safe-haven currencies lost ground. Optimism as regards trade with China also contributed to enhancing positive sentiment in the market. Liu He, Vice Premier of China, is scheduled to visit Washington during the upcoming week in order to sign the first Phase of the deal.

In the upcoming week, the focus shifts to inflation and retail trade numbers from the United States. The top economic data scheduled to be released from elsewhere in the world include China’s GDP growth rate and UK’s inflation figures. Having said that here is an outlook on a few of the key releases:

#1: Canada BoC Business Outlook Survey (01/13/2020 Monday 21:00 GMT)

forex market outlookResults from the Business Outlook Survey carried out by the Bank of Canada in autumn last year indicated that there is a small improvement in business sentiment. However, the regional differences were more pronounced. Central Canada’s positive views were offset by the widespread weakness prevalent in the Prairies. The survey data also indicated moderate growth in sales in the days to come. Sales expectations remained positive in most of the regions, especially in Quebec, but came in soft in the Prairies. Overseas demand continued to support prospects of export sales, though trade tensions weighed them down. Hiring plans and investments were healthy in areas outside energy-producing regions.

#2: New Zealand NZIER Business Confidence (01/14/2020 Tuesday 02:30 GMT)

A survey carried out by the New Zealand Institute for Economic Research (NZIER) showed that business confidence declined to the lowest level since March 2009. Business confidence dropped a net 35 percent in the September quarter because of a decline in trading activity. According to the results of the Quarterly Survey of Business Opinion, the business community expressed pessimism in the third quarter.

#3: United States CPI (01/14/2020 Tuesday 19:00 GMT)

In the United States, consumer prices rose by 0.3 percent on a month-on-month basis in November last year after registering a 0.4 percent increase in October 2019. The reading for the month beat analysts’ expectations for a 0.2 percent increase. Prices increased for shelter, energy, recreation, medical care, and food.

Forecast for December 2019: An increase of 0.2 percent is on the cards

#4: United States Core CPI (01/14/2020 Tuesday 19:00 GMT)

In the United States, the core inflation rate which excludes the prices of food and energy rose by 0.2 percent in November 2019.

Forecast for December 2019: 02 percent

#5: United Kingdom MPC Member Saunders Speaks (01/15/2020 Wednesday 14:10 GMT)

Michael Saunders, the external BoE Monetary Policy Committee Member, is scheduled to deliver remarks at the breakfast meeting at the South Eastern Regional College in Northern Ireland. Audience questions are expected. If his remarks have a more hawkish tone than expected, then it is good for the UK currency.

#6: United Kingdom CPI (01/15/2020 Wednesday 15:00 GMT)

In the United Kingdom, consumer prices remained steady at the 1.5 percent level on a year-on-year basis in November last year, the lowest level ever since November 2016. However, the reading for the month came in slightly above analysts’ expectations of 1.4 percent.

Forecast for December 2019: 1.5 percent

#7: Euro Area ECB Monetary Policy Meeting Accounts (01/16/2020 Thursday 18:00 GMT)

The Monetary Policy Committee of the European Central Bank releases minutes of the committee’s meeting eight times every year, four weeks after the announcement of the Minimum Bid Rate. It provides a detailed account of the most recent meeting of the ECB Governing Board and offers in-depth insights into the economic conditions that impacted the members’ decision as regards setting interest rates.

#8: United States Retail Sales (01/16/2020 Thursday 19:00 GMT)

In the United States, retail trade rose by 0.2 percent in November last year, easing from the revised 0.4 percent gain in October. The reading for the month also missed analysts’ expectations for a 0.5 percent increase. Sales of motor vehicles and gasoline slowed down after a jump in the prior month. Spending on clothing and at restaurants and bars dropped.

Forecast for December 2019: 0.3 percent

#9: United States Core Retail Sales (01/16/2020 Thursday 19:00 GMT)

In the United States, core retail sales, which exclude autos, edged up by 0.1 percent on a month-over-month basis in November after the reading for the prior month was revised upwardly to a gain of 0.3 percent. Analysts had expected core retail sales to increase by 0.4 percent.

Forecast for December 2019: 0.5 percent

#10: Euro Area ECB President Lagarde Speaks (01/16/2020 Thursday 23:30 GMT)

Christine Lagarde, President of the European Central Bank, is scheduled to speak in Frankfurt at a New Year reception. Markets often turn volatile during her speeches. This is because traders make an attempt to understand the direction of interest rates.

#11: China GDP (01/17/2020 Friday 07:30 GMT)

China’s GDP grew 6.0 percent on a year-on-year basis in the third quarter of last year, slowing from the 6.2 percent growth registered in the prior quarter. Analysts had expected a growth of 6.1 percent. It was the weakest GDP growth rate ever since the March quarter of 1992 as trade tensions with the United States continued to persist. Alarming off-balance-sheet borrowings by the local governments and weakening global demand also impacted.

Forecast for the fourth quarter of 2019: 6.0 percent

#12: United Kingdom Retail Sales (01/17/2020 Friday 07:30 GMT)

In the United Kingdom, retail trade fell 0.6 percent on a monthly basis in November and missed analysts’ expectations for a 0.3 percent gain. This marked a decline in retail trade for the fourth month in a row, the longest since 1996. Retail trade declined across all sectors. The drop was led by food and non-store retailing stores. According to the ONS, the Black Friday was six days after the reporting period in November and impacted sales.

Forecast for December 2019: 0.8 percent

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