Key Fundamental Factors This Week (1/19-1/23)

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Key Fundamental Factors This Week (1/19-1/23)

Last week, the major shake up in the forex market was the surprise announcement from the Swiss National Bank (SNB) that it was going to stop defending the EUR/CHF at the 1.20 floor. It has been doing so since 2011, but the euro has been falling and looks poised to continue falling as most expect the European Central Bank (ECB) to implement QE soon. In fact the ECB will be meeting this week. Let’s take a look at the key fundamental factors that are scheduled for this upcoming week (1/19-1/23).

Tuesday (1/20)

China GDP q/y (Q4)
Forecast: 7.2%
Previous: 7.3%
china gdp
(click to enlarge; source: forexfactory.com)
During the years following the financial crisis of 2008, China’s growth was the tide that lifted all boats. However, growth has decelerated after a bubble-like property market in the past few years and is expected to have continued declining in late 2014.

German ZEW Economic Sentiment (Jan.)
Forecast: 40.1
Previous: 34.9
eurozone ZEW economic sentiment
(click to enlarge; source: forexfactory.com)
Economic sentiment in the Eurozone might be bottoming as the January reading is expected to rebound to 40.1. In November, the reading was -3.6. This reflects the expectation of the ECB to implement QE very soon.

NZ CPI q/q (Q4)
Forecast: 0.0%
Previous: 0.3%
Inflation should have come down in Q4. Energy prices have been declining globally, and inflation data from many developed countries have been subdued in the latter half of 2014.

Wednesday (1/21)

BoJ Monetary Policy Statement and Press Conference: The Japanese Yen has been resilient since December. Most likely the BoJ will stay on course with its current stimulus measures. The Japanese yen should continue to be weak unless the BoJ says something to the effect of a plan to normalize monetary policy. Right now, it is in full-blown stimulus mode, and the language will likely reflect that and thus keep pressure on the JPY.

UK Average Earnings 3m/y (Nov.)
Forecast: 1.7%
Previous: 1.4%
Claimant Count Change (Dec.)
Forecast: -24.2K
Previous: -26.9K
Jobs data especially wage growth will be important to the BoE. It has not given any clear forward guidance since last year when it first projected a rate hike to be at the end of 2014. It is now moved back to late 2015 to early 2016.
BoE Meeting Minutes 

US Building Permits (Dec.) annualized
Forecast: 1.06M
Previous: 1.05M

BoC Monetary Policy Statement and Press Conference – The BoC will likely have to address its employment issue, seen in the past couple of reports. This should add pressure to the already ailing CAD, especially if the loonie is consolidating ahead of the BoC meeting.

Thursday (1/22)

ECB Monetary Policy Statement and Press Conference – This could be a big one. The time for the ECB to implement QE is near. If the ECB does not implement QE now or during the next meeting, it will probably be because economic data in the Eurozone has stabilized. If that is true, the euro is due for a bullish correction. Otherwise, if the ECB does implement QE, the euro should continue to be pressured. However, be aware of a possible “buy the rumor sell the news” situation. That is – the market has been pricing in euro weakness due to the prospect of QE. Now if the event has materialized, the market will no longer need to price in further euro- weakness out side of the short-term. So if QE is implemented expect some further decline, but be ready for a correction in the near-term.

US Jobless Claims
Forecast: 301K
Previous Week: 316K

Friday (1/23)

German Flash Manufacturing PMI (Jan.)
Forecast: 51.8
Previous: 51.2
German Flash Services PMI (Jan.)
Forecast: 52.6
Previous: 52.1
Manufacturing data seems to be stabilizing, but won’t be enough to reverse the euro.

European Flash Manufacturing PMI (Jan.)
Forecast: 51.0
Previous: 50.6
European Flash Services PMI (Jan.)
Forecast: 52.1
Previous: 51.6

UK Retail Sales m/m (Dec.)
Forecast: -0.6%
Previous: 1.6%

CAN CPI m/m (Dec.)
Forecast: -0.5%
Previous: -0.4%
can cpi
(click to enlarge; source: forexfactory.com)
CAN Core CPI m/m (Dec.)
Forecast: -0.3%
Previous: -0.2%
Inflation has been down across the glove because of lower energy prices. However, Canada’s core CPI reading is also expected to remains in negative territory, which should keep the CAD under pressure.

CAN Retail Sales m/m (Dec.)
Forecast: 0.1%
Previous: 0.0%
CAN Core Retail Sales m/m (Dec.)
Forecast: 0.5%
Previous: 0.2%

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.
  • abbas

    hi Mr Fan.. how you see the GbpJpyin next week?