Forex Weekly Outlook – US consumer in focus after the Mid-East flare-up

As the dust settles from the Non-Farm Payrolls, the focus shifts to consumer data, while the Chinese GDP report is also of high interest. Here the highlights for the upcoming week.

The US and Iran have maintained a high level of rhetoric, but the lack of imminent action allowed markets to calm and safe-haven currencies to lose ground. Optimism about trade is also having its say. Chinese Vice Premier Liu He is visiting Washington in the upcoming week to sign the Phase One deal. US Non-Farm Payrolls fell short of expectations with only 145K jobs gained and wage growth slowing to 2.9% yearly. However, other figures were upbeat and the greenback managed to shrug off the disappointment.

1. UK GDP: Monday, 9:30. The monthly Gross Domestic Product report for November is set to provide another insight into the fourth quarter of 2019. Back in October, the economy stagnated, just after the UK economy escaped a recession in the third quarter. Uncertainty related to Brexit has likely weighed on the economy also in November.

2. US inflation: Tuesday, 13:30. The Federal Reserve has been expressing frustration with the lack of inflation – which is a global phenomenon. The figures for December will likely show that the Core Consumer Price Index – the most significant figure – remained around 2.3% recorded in December. Both headline and core monthly figures carry expectations for an increase of 0.2%.

3. UK inflation: Wednesday, 9:30. Lower energy prices and other factors have contributed to a drop in British CPI – 1.5% yearly in November 2019. The figures for December are expected to remain unchanged, while Core CPI will likely remain stable around 1.7%.

4. US retail sales: Thursday, 13:30. Consumption consists of 70% of the American economy. In November, headline sales advanced by 0.2% and the volume of core sales by 0.1%. The all-important control group advanced by 0.1%. The numbers will likely be better in December, which not only encompasses Christmas shopping, but also some of the Black Friday sales which came out late in the past season. Headlines sales carry expectations for an increase of 0.3% while core sales are projected to rise by 0.5%.

5. Chinese GDP: Friday, 2:00. Many doubt the accuracy of the data from the world's second-largest economy, as it tends to match the desires of the ruling party. Nevertheless, the publication rocks markets. After growing at a yearly pace of 6% in the third quarter, economists expect a 6.1% growth rate for all of 2019. Industrial output is also eyed.

6. US consumer confidence: Friday, 15:00 The University of Michigan's first estimate of consumer sentiment for 2020 is set to edge up from 99.3 to 99.4, reflecting strong confidence. Any deviation may impact the close of the week.