The Forex Week Ahead

The Forex Week Ahead: January 23rd – 28th

USD Among the week’s highlights will be a count of how many executive order actions will be signed by Trump and how many directives are pursued to start the slow process of health care, immigration and trade reforms.  At the top of the data list is Q4 GDP growth. Estimates from the median Bloomberg consensus have growth pegged at 2.2% q/q at a seasonally adjusted and annualized pace. Across major Banks, the range of estimates runs from a low of slightly better than 1½% up to about 2½%. Housing data will also be in focus with existing home sales and new home sales during December to be released on Tuesday and Thursday. Because pending home sales have been softening, completed resale’s might follow suit. Big-ticket durable goods orders will be the judge of this on Friday when December’s figures arrive. The figures are expected to register decent headline growth after volatile aircraft orders dragged down the prior month, but also deliver the sixth rise in seven months for core capital goods orders ex-transportation and defence that serves as a closer proxy for investment spending.

EUR At the top of the list of data risks will be another round of Eurozone purchasing manager indices for the manufacturing and service sectors on Tuesday. Germany will add to sentiment data with the IFO reading of business confidence on Wednesday and its expectations component is resting around the highest readings since 2014. Retail sales will also be updated with December’s results. Consumer spending patterns have been erratic of late with a sizeable drop in September followed by a bigger gain in October only to see much of that get unwound again in November.

GBP Sundry data risks will include monthly readings for services in the UK. UK Q4 GDP. released Thursday, is expected to land at about ½% q/q and thus largely unchanged from the pace set over each of the prior two quarters. The UK economy has weathered the Brexit period rather well thus far.

JPY Most of the focus will be upon assessing signals of exactly how and when the new incoming US administration’s policies may impact Asia. Japanese CPI is expected to either remain at 0% y/y (Tokyo) or fall back a little to slightly above 0% y/y (National) in the final month of 2016 in yet another year for the BoJ’s dashed hopes. Core inflation ex-food and energy is also around 0% and, as such, there remains zero reflation evidence out of Japan.

AUD Australia releases Q4 CPI inflation reports next week. Inflation is expected to climb in year-ago terms to a few tenths higher than the 1.3% print in Q3. Less reflation evidence is expected in trimmed mean and weighted median measures that are expected to be little changed from the prior quarter’s pace with almost all of the reflation evidence confined to inflation data catching up to what commodity markets and the currency have already dictated.

CAD There will be little of note on the docket for Canada-watchers by way of anything that could influence the domestic market tone beyond global events over the coming week. Markets may continue to focus upon the aftermath of BoC Governor Poloz’s comment that “Yes, a rate cut remains on the table” and inform such risks via the only thing due out over the coming week.

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