A volatile week left the dollar in a better position, as QE3 and a solution for Greece are both very uncertain. Will the dollar reverse its previous losses now? Rate decisions in the euro-zone, the UK and Australia are the main market movers this week. Here is an outlook on what lies ahead.
Last week excellent NFP figures were released with a 243,000 job gain and unemployment rate dropping to 8.3% in January from 8.5 in December. Both figures bit expectations leaving a lower chance for QE3. Will we see further improvement this year?
- Australian rate Decision: Tuesday, 3:30. The Reserve Bank of Australia lowered its cash rate to 4.25% from 4.5% in light of a slowdown in China, European debt crisis and growing inflation. The board declared it will monitor the market to ensure sustainable growth. The Reserve Bank of Australia is expected to lower once again its cash rate to 4.00%.
- New Zealand employment data: Wednesday, 21.45.New Zealand’s unemployment rate increased against prediction to 6.6% in the third quarter ending in September 30 while analysts expected a decline to 6.4%. This reading followed a 6.5% unemployment rate in the previous quarter. Meanwhile the Job market expanded by 0.2% to 2.22 million in the three months ended Sept. 30 lower than the 0.5% rise anticipated by analysts and following 0.1% increase in the previous queerer. An increase of 0.4% is expected in the job market with the same unemployment rate of 6.5%.
- UK rate decision: Thursday, 12:00. The BOE maintained its bank rate at 0.5% and its monetary policy committee decided to continue the 275 billion pound asset purchase. These decisions were in line with predictions. There is a strong case for more QE in the UK, though recent PMI figures showed improvement. An expansion of 50-75 billion pounds is the current consensus.
- Euro-Zone rate decision: Thursday, 12:45. The European Central Bank maintained its cash rate at 1.0%. President Mario Draghi talked in favor of the three-year LTRO policy claiming it helped avoid credit crunch in major banks. He also assessed that The Euro-Zone will recover during 2012 amid global demand. No Change is forecasted although some expect a cut of 0.25% to 0.75%. As these levels were never seen, Draghi is more likely to wait before such a move.
- US unemployment claims: Thursday, 13:30. The number of Americans filing first claims for unemployment benefitsdropped last week, to 367,000 from 379,000 in the week before. This is an encouraging figure preceding the important non-farm payrolls event suggesting the US economy is producing more jobs which eventually lower unemployment rate. A rise to 390,000 is anticipated.
- Canadian trade balance: Friday 13:30. Canadian trade balance switched to surplus in November amid a surge in auto and energy sectors reaching $1.1-billion trade surplus. This reading was better the $0.5 billion deficit predicted and will certainly have a positive impact on fourth-quarter growth. Imports decreased 0.8% to $39 billion. Trade balance surplus is expected to decrease to $0.7 billion.
- US Trade Balance: Friday, 13:30. The U.S. trade deficit widened more than predicted in November reaching $47.8 billion driven rising imports of crude oil and automobiles while exports dropped. The deficit was bigger than the $44.8 billion estimated by analysts. Trade deficit is predicted to grow to -$48.2 billion.
- US Prelim UoM Consumer Sentiment: Friday, 14:55. Preliminary data of consumer sentiment surged in January to 74 from69.9 in December in light of optimism concerning the job market recovery. The reading was higher than the 71.2 predicted suggesting a positive trend in the US economy with stronger consumer spending. Another rise to 74.3 is forecasted.
- US Federal Budget Balance: Friday, 19:00.US budget deficit climbed to $85.97 billion in December from $78.13 billion caused by payments shifted to December. The first quarter deficit doped to $321.74 billion from $368.96 billion in the first three months of fiscal 2011. This grim figures will probably hold off the continuation of the payroll tax cut. Deficit is expected to narrow to $65.2 billion.
That’s it for the major events this week. Stay tuned for coverage on specific currencies.
*All times are GMT.