Fewer Economic Releases To Fuel This Week’s Forex Moves

Following the ECB's disappointing mandate of a 10 basis point cut in the deposit rate and the QE extension, to March 2017 from earlier formal deadline of September 2016, the Euro appreciated heavily against majority of its counterparts and alternatively damaged the US Dollar. The greenback, on the other hand, failed to enjoy the benefits of higher than expected NFP as short-covering rally by the EUR and comments from the Fed Chair, that reduced importance of December job numbers, forced USD bulls to liquidate some of their recent gains, resulting into a big weekly decline by the US Dollar Index (I.USDX). Further, the JPY witnessed downside as some BoJ policy makers doubted ability of the central bank's monetary policy measures to reach the inflation target and suggested to remove the date limit for the same while the GBP also remained weaker with downbeat Manufacturing and Construction PMI. Moving on, the commodity currencies were kept trailing in red due to global commodity pessimism, mainly triggered by China, while the crude prices plunged as OPEC refrained from production cuts in its meeting, favoring additional supply glut.

Looking forward to the current week, which started with another USD up-move, there are fewer economic releases to fuel the forex volatility wherein there aren't any major releases from the Euro-zone. However, monetary policy meetings by the RBNZ, SNB and BoE, Australian job numbers, coupled with US Retail Sales, PPI and UoM Consumer Sentiment, are some of the important releases to govern this week's trading. Moreover, Japanese GDP, Chinese Trade Balance and Industrial Production and the UK Manufacturing Production are additional data points that could direct this week's forex moves.

Consumer Centric Details May Help Determine Near-Term USD Trend

After tepid reaction to the November job numbers, market players are less likely to give more importance to any other matters than the next week's FOMC meeting; however, monthly releases of Retail Sales, PPI and Preliminary UoM Consumer Sentiment, scheduled for Friday, may provide intermediate moves to the US Dollar.

Forecasts show that all of the scheduled details are likely to print upbeat numbers, with Retail Sales expected to mark three months' high of 0.2% and the Core reading surpassing previous 0.2% with 0.3% while the Consumer Sentiment Index by the University of Michigan may mark an improvement from its downwardly revised prior of 91.3 to 92.3.

Gradual improvement in consumer-centric details can continue favoring the chances of first in a decade interest rate hike during the next week's critical FOMC meeting, indicating a reimbursement of recent USD decline.

AUD Traders Should Watch Australian Job Numbers & Chinese Data-Points

Recently upbeat Australian labor market details have helped the Reserve Bank of Australia (RBA) to avoid further interest rate cuts and hold the monetary policy intact for more than six months; however, pessimism from Australia's largest consumer, China, keep threatening the central bank policy makers. Hence, this week's Australian job numbers and some of the headline Chinese details, like Trade Balance, Inflation and Industrial Production, become important for the AUD traders to Watch.

AU Job Numbers

As discussed, recent job details from Australia signal robust growth in labor market where the Unemployment is heading south to the lowest in more than a year by printing 5.9% mark while the Employment Change rallied to the record high of 58.6K during its October reading. Consensus relating to the actual releases, scheduled for Thursday, shows a downbeat mark as the Unemployment Rate is likely increasing to 6.0% and the Employment Change expected to register -10.0K print. Other than the headline job numbers, Australian indices revealing Business and Consumer Sentiments, scheduled for release on Tuesday and Wednesday respectively, are also likely to continue on their south-run due to Chinese weakness.

Being the world's largest industrial player, Chinese economics have multiple impacts. The dragon nation, which has been struggling to counter slowing growth and inflation off-late, is scheduled to release monthly details of Trade Balance, CPI and Industrial Production during the current week. Tuesday's Trade Balance is expected to show higher trade surplus of 395B against 393B prior and the forecast relating to Wednesday's CPI show 1.4% versus 1.3% previous mark. Moreover, Industrial Production, the core to Chinese economy, is also expected to have expanded by 5.7% as compared to its previous 5.6% reading.

Even if downbeat job numbers favor interest rate cut by the RBA, and in-turn the AUD downside, improvement in Chinese economics may help the Aussie, as it is nicknamed to wipe some of the losses.

BoE Can Guide GBP Traders

Off-late UK economics have failed to print positive numbers, indicating a delayed interest rate hike by the second promising contestant, the BoE, which supports monetary policy tightening, except the Fed; however, the central bank kept refraining from committing the weakness and hence making GBP traders worried near all the BoE outcomes. The Bank of England (BoE), during its Thursday's monetary policy meeting, is neither expected alter the current monetary policy nor does any more policymaker, except one, is expected to vote for a bank rate change.

Although, the UK central bank isn't expected to alter its monetary policy comments from the statement, more likely bearish, may reveal future actions by the BoE and are important to determine near-term GBP moves.

In addition to central bank meeting, UK Manufacturing Production, scheduled for Tuesday release, becomes another important indicator to forecast GBP trend. The monthly reading is expected to suggest a contraction in UK manufacturing activity by -0.1% against +0.8% prior and can favor further downside by the UK currency.

RBNZ, SNB And Japanese GDP Are Remaining Readings To Consider This Week

Other than the BoE, Reserve Bank of New-Zealand (RBNZ) and Swiss National Bank (SNB) are also scheduled to announce their monetary policy decisions on Thursday while Tuesday's Final reading of Q3 2015 Japanese GDP is an indicator to help analyze upcoming BoJ actions.

While the Japanese GDP is expected to mark an uptick from its initial -0.2% forecast with +0.1% print, helping the JPY rise, and the SNB isn't expected to alter its current monetary policy, with continued CHF downside, the RBNZ is likely to practice an interest rate cut after holding the monetary policy intact during October meeting as drop in the dairy products favor the need of additional monetary measures by the New-Zealand economy.

Should the Japanese GDP dips below its initial estimations, chances of BoJ announcing additional monetary policy easing measures can't be denied, which in-turn favors further JPY downside while dovish comments by the SNB may accelerate CHF decline. Moreover, pessimistic outlook by the RBNZ Governor, during accompanied with an interest rate cut, would favor future rate cuts and thus opening room for resumption of the downward trajectory for the NZD.

Follow me on twitter to discuss latest markets events @Fx_Anil