Forex - Weekly Outlook: January 7 - 11
This week investors will be looking to Wednesday’s minutes of the Federal Reserve’s December meeting and a speech by Fed Chairman Jerome Powell a day later as they try to determine the Fed’s outlook on monetary policy.
Last month the Fed voted to increase interest rates for a fourth time in 2018 and indicated that two more rate hikes this year are likely. While investors will be closely scrutinizing the minutes, they will probably be dated following remarks by Fed Chairman Jerome Powell last Friday.
Powell pledged that the central bank will be watching how the economy performs this year and will adjust policy accordingly.
“As always, there is no preset path for policy,” Powell said. “And particularly with muted inflation readings that we’ve seen coming in, we will be patient as we watch to see how the economy evolves.
Powell is due to deliver remarks at The Economic Club of Washington on Thursday and U.S. inflation figures are due out on Friday.
Powell’s dovish comments pressured the U.S. dollar lower, with the dollar index giving up gains made after a robust U.S. jobs report earlier in the day.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, ended Friday down 0.13% at 95.75.
The Labor Department reported that U.S. employers hired the most workers in 10 months in December while boosting wages.
The data contrasted with reports earlier in the week signaling the global economy is slowing. China posted data showing factory activity contracted for the first time in 19 months in December, and there was evidence of weak manufacturing across much of Europe and Asia.
The U.S. dollar was little changed against the euro late Friday, with EUR/USD at 1.1393.
The U.S. dollar was higher against the yen, with USD/JPY advancing 0.82% to 108.52.
The greenback, which had slipped against the safe-haven Japanese yen in the preceding days amid worries about a slowdown in global growth, found support after China announced new measures to support its economy and hopes grew that upcoming U.S.-China trade talks would make some progress.
Market sentiment improved when China confirmed that trade talks with the U.S. would be held in Beijing on Jan. 7-8.
Ahead of the coming week, Investing.com has compiled a list of significant events likely to affect the markets.
Monday, January 7
The euro zone is to release data on retail sales.
The Institute of Supply Management is to publish its non-manufacturing index.
Tuesday, January 8
Australia is to report on trade figures.
In the euro zone, Germany is to publish data on industrial production.
Canada and the U.S. are both scheduled to release trade figures.
Wednesday, January 9
The euro zone is to release its latest unemployment figures.
The Bank of Canada is to announce its latest interest rate decision and publish a rate statement. The announcement is to be followed by a press conference.
The Federal Reserve is to publish the minutes of its December meeting.
Thursday, January 10
The European Central Bank is to publish the minutes of its December policy meeting.
The U.S. is to release the weekly report on initial jobless claims.
Fed Chairman Jerome Powell is to deliver a speech at The Economic Club of Washington.
Other Fed speakers making appearances on Thursday include St. Louis Fed President James Bullard and Chicago Fed head Charles Evans.
Friday, January 11
Australia is to release data on retail sales.
The UK is to publish reports on GDP growth and manufacturing production.
The U.S. is to round up the week with what will be closely watched inflation data.