Weekly Forex Forecast: Jan 11 – 15th 2016

In a classic risk aversion week, the Japanese Yen emerged on the top with strong gains of 3.33% across the board. The week started off with the Chinese Stock market plunge which sent the global markets into a tailspin on concerns of a slowdown in the economy and the threat of further Yuan devaluation. Investors flocked to the safe haven Yen shedding the riskier assets. The Euro managed to make some modest gains last week, rising 0.50%.

The Aussie, NZD and the Canadian dollars were the biggest losers of the week, with the AUD losing near -3.03%. The commodity risk assets came under pressure understandably against the safe haven currencies. The US Dollar managed to make some gains over the week however on a modestly better non-farm payrolls data which continues to build the case for the US to remain on the monetary policy tightening cycle.

Fundamentals for the Week 11/01 – 15/01

Date	Time	Currency	Detail	Forecast	Previous
11-Jan	02:30	AUD	ANZ Job Advertisements m/m		1.30%
	10:15	CHF	Retail Sales y/y	0.30%	-0.80%
	11:30	EUR	Sentix Investor Confidence	11.5	15.7
	15:15	CAD	Housing Starts	213K	212K
	17:00	USD	Labor Market Conditions Index m/m		0.5
12-Jan	01:50	JPY	Current Account	1.52T	1.49T
		JPY	Bank Lending y/y		2.30%
	02:00	NZD	ANZ Commodity Prices m/m		-5.60%
	11th-15th	CNY	Foreign Direct Investment ytd/y		7.90%
	07:00	JPY	Consumer Confidence	42.3	42.6
		JPY	Economy Watchers Sentiment	46.7	46.1
	12th-18th	CNY	M2 Money Supply y/y	13.60%	13.70%
	12th-18th	CNY	New Loans	700B	709B
	11:30	GBP	Manufacturing Production m/m	0.10%	-0.40%
		GBP	Industrial Production m/m	0.00%	0.10%
	12:30	USD	FOMC Member Fischer Speaks
	13:00	USD	NFIB Small Business Index	95.4	94.8
	17:00	GBP	NIESR GDP Estimate		0.60%
		USD	JOLTS Job Openings	5.41M	5.38M
		USD	IBD/TIPP Economic Optimism	47.6	47.2
13-Jan	01:50	JPY	M2 Money Stock y/y	3.40%	3.30%
	Tentative	CNY	Trade Balance	339B	343B
	Tentative	CNY	USD-Denominated Trade Balance	52.2B	54.1B
	09:45	EUR	French CPI m/m	0.10%	-0.20%
	12:00	EUR	Industrial Production m/m	-0.20%	0.60%
	Tentative	EUR	German 10-y Bond Auction		0.49|1.1
	15:00	CHF	Gov Board Member Zurbrugg Speaks
	17:30	USD	Crude Oil Inventories		-5.1M
		USD	Federal Budget Balance	-2.7B	-64.6B
14-Jan	01:50	JPY	Core Machinery Orders m/m	-7.30%	10.70%
		JPY	PPI y/y	-0.40%	-3.60%
	02:30	AUD	Employment Change	-10.3K	71.4K
		AUD	Unemployment Rate	5.90%	5.80%
	08:00	JPY	Prelim Machine Tool Orders y/y		-17.70%
	09:00	EUR	German WPI m/m		-0.20%
	11:00	EUR	Italian Industrial Production m/m	0.30%	0.50%
	14:00	GBP	MPC Official Bank Rate Votes	1-0-8	1-0-8
		GBP	Monetary Policy Summary
		GBP	Official Bank Rate	0.50%	0.50%
		GBP	Asset Purchase Facility	375B	375B
		GBP	MPC Asset Purchase Facility Votes	0-0-9	0-0-9
	14:30	EUR	ECB Monetary Policy Meeting Accounts
	15:30	CAD	NHPI m/m		0.30%
		USD	Unemployment Claims	278K	277K
		USD	FOMC Member Bullard Speaks
		USD	Import Prices m/m	-1.50%	-0.40%
	23:45	NZD	FPI m/m		-0.20%
15-Jan	02:30	AUD	Home Loans m/m	-0.40%	-0.50%
	09:45	EUR	French Gov Budget Balance		-76.2B
	11:30	GBP	BOE Credit Conditions Survey
		GBP	Construction Output m/m	0.50%	0.20%
	12:00	EUR	Trade Balance	21.1B	19.9B
	15:30	USD	Core Retail Sales m/m		0.40%
		USD	PPI m/m		0.30%
		USD	Retail Sales m/m		0.20%
		USD	Core PPI m/m		0.30%
		USD	Empire State Manufacturing Index		-4.6
	16:00	USD	FOMC Member Dudley Speaks
	16:15	USD	Capacity Utilization Rate		77.00%
		USD	Industrial Production m/m		-0.60%
	16:30	GBP	CB Leading Index m/m		-0.10%
	17:00	USD	Prelim UoM Consumer Sentiment		92.6
		USD	Business Inventories m/m		0.00%
		USD	Prelim UoM Inflation Expectations		2.60%

Time: GMT+2

Currencies/Events to Watch this Week

AUD: AUD: The Australian jobs report data is due out on the 14th of January. Expectations are for the monthly employment change to decline -10.3k while the Australian unemployment rate is expected to rise to 5.90% from a surprise 5.80% dip a month ago. So far, the unemployment data has been relatively robust and has ended all speculation for any further rate cuts from the RBA. Australian home loans details are also due later on 15th January with expectations of a -0.40% decline for the month. With the Aussie losing ground strongly last week, a better than expected unemployment data could likely help support the AUD in the near term.

CAD: After a modestly better employment numbers being posted last week, the week ahead is relatively quiet for the Canadian dollar. Housing starts and BoC business outlook survey are the only main events to look forward to for the week ahead. With the recent employment data posting better than expected results, the BoC is expected to hold on to rate cuts at its meeting later this year. However, falling Oil prices remain a drag on the CAD.

CHF: Swiss retail sales numbers are due out on the 11th of January but the main event of the week remains a speech by SNB member Zurbrugg. Although the Euro has remained strong to the Swiss Franc, the opportunity could be used to send some dovish signals to the market. The Swiss Franc did not appreciate much last week despite the market turmoil indicating that investors prefer the safe haven bid of the Yen than the Swiss Franc.

EUR: Data from Eurozone for the week ahead includes the meeting minutes from the ECB’s December policy meeting. While not much is expected, markets could be looking at clues as to when the ECB could likely ease QE further again. This has gained importance in light of the most recent flash CPI estimates from the Eurozone which showed a near flat reading if not lower.

GBP: The British Pound has been trading weak over the month and the economic data this week includes the BoE monetary policy. Expectations are for the Central bank to keep rates steady with a hint of some dovishness for expectations. Besides the BoE, manufacturing and industrial production numbers are also due for the week with modest expectations of a 0.10% and 0.0% reading for the month.

JPY: There is not much of economic data to look forward to from Japan this week. Consumer confidence and PPI are likely to influence the Yen to a certain extent. However, the Yen is likely to remain in focus on how the China story continues to evolve. Further weakness from the Chinese markets could continue to keep the Yen in the driving seat. However, the recent fast appreciation of the Yen could potentially open the room for off the cuff remarks from BoJ officials.

USD: After the busy start last week, the economic data from the US takes a breather with only the retail sales and PPI being the big events to take notice. There are also a lot of Fed speeches due over the week which could add to additional volatility over the week.