During the first full week of 2016, turmoil from China derailed the global financial markets by spreading heavy losses and dragged the US Dollar Index (I.USDX) down even as the December US non-farm payrolls number marked remarkable strength. Chinese pessimism, triggered by weaker headline PMIs, gained momentum during later part of the week when the PBOC devalued Yuan for eight consecutive days and caused losses to Crude and commodity oriented currencies, namely, AUD, NZD and CAD; however, the same move helped the JPY and the Gold prices due to safe-haven demand. Moreover, the GBP extended its downside with weaker than expected data-points while the EUR remained more or less stable with no major economics to publish.
Moving forward, the current week has fewer economic details that could confine big moves of the forex market. However, Australian job numbers, US Retail Sales, PPI, Empire State Manufacturing and UoM Consumer Sentiment, coupled with the UK Manufacturing Production, BoE meeting and the Chinese Trade Balance, are some of the data-points that might provide good trading opportunities.
Consumer Centric US Details Could Help Forecast USD Moves
While Chinese pessimism kept escalating fears that the Fed would find it difficult to introduce consecutive rate hikes, consumer-centric numbers, namely the Retail Sales and the UoM Consumer Sentiment, may help determine immediate moves of the greenback.
Other than the Thursday, when the weekly Jobless Claims number will be out (expected 275K v/s 277K prior), US economic calendar is active during Friday when monthly releases of Retail Sales, PPI, Empire State Manufacturing Index and the Preliminary reading of UoM Consumer Sentiment are scheduled for publish. Amongst them, the Retail Sales and the Consumer Sentiment are likely to drive this week's USD moves. Both these figures aren't favoring the greenback up-move as the Retail Sales growth is expected to contract for the first time in six months with -0.1% mark versus +0.2% prior while the Core Retail-Sales forecast favors 0.2% print against 0.4% prior. Also, the preliminary reading of UoM Consumer Sentiment gauge is also likely to remain near the upwardly revised previous mark of 92.6 by marking 92.7 number. Moreover, the PPI is expected to liquidate its last month's gain of +0.3% with another negative reading of -0.2% and the Empire State Manufacturing, even after likely to mark the six month highs with -4.1 against -4.6 prior, may remain in the negative region. With recently released upbeat job details failing to help the greenback extend 2015 gains, weaker consumer-centric data-points may provide further downside to the US Dollar.
Chinese Trade Balance And Australian Labor Market Numbers To Portray AUD Trend
Even if troubles at China, Australia's largest consumer, keep pushing the Australian Dollar down, December month Chinese Trade Balance numbers and labor market details from the Australia may help determine near-term Australian Dollar (AUD) moves.
Wednesday's Chinese Trade Balance is expected to match recently downbeat Chinese numbers with smaller surplus of 339B against 343B prior and the Australian Bureau of Statistics is also expected to reveal sharp turnaround in December month labor market numbers during its Thursday announcement. The Employment Change is likely contracting with the highest pace in 10 months, by printing -11.0K versus 71.4K released during last month while the Unemployment rate is also forecasted to disturb three month slid with a 5.9% mark against 5.8% prior.
Should Australian job numbers cause disappointment, negative wipes from China gets stronger, signaling further downside of the AUD. On the contrary, better than expected releases still need to confront the pessimism from its largest consumer and might provide only short-lived up-moves to the nation's currency unless being drastically high.
GBP Traders Should Look For UK Manufacturing Production & BoE Details
Weaker UK details continue spreading worries that the BoE policy makers might have to wait longer before announcing monetary policy tightening and continue pulling the GBP downwards. Though, monthly details of UK Manufacturing Production, scheduled for Tuesday, and the Thursday's monetary policy meeting by the Bank of England (BoE) could help foresee near-term moves of the UK currency.
Forecast concerning November month Manufacturing Production reflects a reversal of prior -0.4% contraction with +0.1% mark and only one BoE MPC member is expected to vote for an interest rate hike. However, recently released negative economic data-points, coupled with the Chinese turmoil, might force the UK central bank in uttering some dovish words. Even if the Manufacturing Production prints a welcome number, dovish BoE statement, due to Chinese trauma, may continue dragging the GBP towards south unless there is extreme up-mark by the data.
Japanese Details May Support Projecting Further JPY Up-move
Global market threats, mainly emanating from China, have continued helping the safe-haven demand of the Japanese Yen (JPY); however, monthly releases of Consumer Confidence, Economy Watchers Sentiment and the PPI, can provide fundamental support to project further up-moves of the JPY.
Although, Tuesday's Japanese Consumer Confidence is expected to mark a bit weaker print of 42.3 against 42.6 prior and the Economy watchers sentiment is also likely revealing another below 50 reading with 46.7 versus 46.1 previous, December month PPI, scheduled for Thursday, is expected to mark the highest number since April 2015 with -0.4% as compared to -3.6% revealed for the month of November.
As global pessimism favors safe-haven demand of the JPY, upbeat economic data-points could help the BoJ in refraining from further monetary policy easing and can provide extended up-move to the Japanese currency.
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