The Forex Week Ahead

The Forex Week Ahead: February 6th – 10th

USD - Fed speak may bring out more individual opinions regarding what was discussed at the FOMC meeting on January 31st– February 1st. Key may be any revelations on the criteria surrounding reinvestment decisions that may gradually come out ahead of either Chair Yellen’s semi-annual testimony to Congress the following week on February 15th or the minutes to the last meeting when they land on February 22nd if they’re not stale by then. Data risk is confined to Friday and only upon the University of Michigan’s consumer sentiment metric. That will be watched for whether it tracks the Conference Board’s gauge lower, including the lowest buying intentions since last summer after a brief post-election bump.

EUR - Germany, France, Italy and Spain will clock updates on industrial production in December. Following recently encouraging signals, the updates will inform hand-off risks and momentum arguments for Q1 growth. Following the biggest monthly plunge since November 2014, eyes will also be on German factory orders that fell by 2.5% m/m in the November reading. Germany and France release trade figures for December. In this case, the challenge will be to keep up prior momentum. German exports grew at the fastest rate since May 2012 in the November reading (+3.9%), and imports also had a solid month with growth at its fastest (3.5% m/m) since June 2014. French exports leapt ahead by 5.3% m/m in November for the fastest increase since June 2015 and imports climbed by 2.8% (toward the upper end of monthly reports over recent years). In terms of monetary policy, ECB President Draghi will address members of the European Parliament on Monday afternoon.

GBP - Estimates close out 2016 with the final readings on trade, industrial output construction output. A monthly GDP estimate for January also arrives from the UK National Institute of Economic & Social Research. The challenge by way of the broad tone of the data releases is that several of them are coming off of pretty solid prior readings. The economy grew by 0.5% in each of the final two months of 2016, while industrial output surged ahead by 2.1% m/m in November. Export volumes powered ahead by 5.1% m/m and, excluding oil, were up by 1.8%. The trade balance nevertheless deteriorated because import volume soared by more (+9.3%). With the UK manufacturing PMI signalling a potential top over the past couple of months, will trade and industrial readings follow suit?

JPY - Japanese machine orders have been volatile but encouraging of late but orders might moderate following the large December gain.

AUD - At the last RBA policy meeting in December, the RBA hinted that it’s done easing for now as it balances the pros and cons of easing. At that time, it said “The board has sought to balance the benefits of lower rates in supporting growth and achieving the inflation target with the potential risks to household balance sheets.” In terms of other macro data, Australia releases retail sales and new home sales

CAD - First up is the final trade report for 2016 on Tuesday. Recall that exports were up by 4.3% m/m in dollar terms and 3.9% m/m in volume terms during November. Then it’s on to housing starts for January on Wednesday, seasonal adjustment factors can dominate at this time of year, and with that goes some concern over the stability of those adjustments. Next week’s print is for January, and the seasonal adjustment for that month adds about one-third to compensate for weather. The week closes with the next jobs print.