Good Morning All; read a shor forex weekly ooutlook. #EnjoyYourTrading
The Week Ahead:
The suggestion in last week’s report that we were likely to see the most pivotal week in a decade really did not do justice to the stunning turn of events. Global currency markets jumped and jolted in response to every plot twist. The AUD was particularly hard hit after soaring on the expectation of a Hillary Clinton election victory. This rally was swiftly reversed when it emerged that Donald Trump was on the verge of victory shedding more than 2% against the greenback in the process. The JPY saw enormous flows as its safe haven status was again invoked.
As quickly as the AUD was hit by news of the Trump victory it rebounded somewhat as the market interpreted his comments as being more favourable than expected. A boost in commodity prices also served to boost the AUD before it gave this all up over the weekend and it has now opened the week at 0.7531 against the USD. We are expecting that the AUD and other commodity based currencies will continue to feel the full force of sentiment towards the Trump presidency and we are anticipating that this will see both peaks and troughs in coming days and weeks.
On the Australian data and front this week the RBA meeting minutes will be released on Tuesday with new RBA Governor Lowe also scheduled to speak. Jobs and unemployment figures will be released on Thursday in an otherwise quiet week.The AUD will continue to take most direction from offshore throughout the week ahead.
The economic calendar for NZ this week has paled into insignificance following the 7.6 magnitude earthquake on Sunday. The entire nation was placed on tsunami alert and the damage to life and property is still to be clearly assessed. The RBNZ took the opportunity to cut interest rates to 1.75% at last week’s meeting and will next convene in February. Retail sales and producer price data is released this week and the latest GlobalDairyTrade Auction will take place. Our thoughts are with all those affected by the earthquake.
With the fallout from the US election the key economic driver at present, there is also a raft of economic data due in the US this week. Retail sales and manufacturing data are due on Wednesday with CPI and unemployment data on Friday key releases. Fed Chair Yellen will be testifying late in the week with other Fed members also due to speak. This could provide some indication of direction expected at the next Fed meeting in December.
British data this week will also be heavily scrutinised following the recent BOE meeting and ahead of the next one in mid-December. CPI figures, average earnings and unemployment data will be announced this week alongside retail sales figures. There is also the lingering tension between BOE Governor Carney and Prime Minister May that could provide some additional colour to the week ahead.
This will also be a key week for European data with GDP data, economic sentiment, trade and CPI figures all due for release. The accounts from the most recent ECB meeting will be released on Friday whilst ECB President Draghi is due to speak at either end of the week.
Asian markets this week will continue to be impacted by the ongoing situation surrounding the US election. As noted above the JPY was very popular as a safe haven play in the aftermath of the poll and could see additional flows throughout the week ahead. GDP data is the main economic release this week in Japan. In China industrial production and retail sales figures will be announced on Monday. Again the proposed trade direction of the Trump Presidency will continue to be a focal point for China in particular with the threat of mega-tariffs and other actin by the US remaining on the President-elect’s radar at present.