Key Fundamental Factors This Week (12/22-12/26)

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Key Fundamental Factors This Week (12/22-12/26)

Last week, the USD strengthened after the FOMC statement, which showed a slightly better economic forecast and therefore reaffirmed that the rate hike will be by mid-2015. This week will be short one with Dec. 25 (Christmas) on Thursday. Let’s see what key fundamental factors are in store for us.

Monday Dec. 22

NZ Trade Balance (Nov.)
Forecast: -550M
Previous: -908M
NZ Trade Balance
(click to enlarge; source: forexfactory.com)
New Zealand’s Trade Balance has been cyclical as we can see in the historical chart. Let’s see if NZ returns to being a net exporter by Q1 2015 as it has been doing since 2009.

Tuesday Dec. 23

CAN GDP m/m (Oct.)
Forecast: 0.1%
Previous: 0.4%
can gdp oct 2014
(click to enlarge; source: forexfactory.com)
Canada’s growth has been subdued since the summer, and a reading that is essentially flat, as expected, should keep the CAD pressured against the USD, especially if the US GDP is revised higher as expected.

US GDP Final (Q3 annualized) 
Forecast: 4.3%
Original: 3.9%
Q2: 4.9%
usd gdp q3 2014
(click to enlarge; source: forexfactory.com)
After a Q1 slump, growth data has been relatively impressive out of the US. In Q2, the economy grew on an annual basis of 4.9%. Q3 was also decent, and this week’s final version is expected to show an upward revision to the previous estimate. A reading that is indeed in-line with expectation should give the US more fuel to gain. But a reading below 4.0% is likely to accompany a period of consolidation especially if the USD is rallying ahead of the GDP release.

US Durable Goods Orders m/m (Nov.)
Forecast: 3.0%
Previous: 0.3%
Core Durable Goods Orders m/m (Nov.)
Forecast 1.1%
Previous: -1.1%

US New Home Sales annualized (Nov.)
Forecast: 461K
Previous: 458K
Core PCE Price Index m/m (Nov.)
Forecast: 0.1%
Previous: 0.2%
The PCE Price index is used by the FOMC to assess inflation. If it is above 0.2%, the USD has a good chance of rallying especially if it has been consolidating. A reading below 0.1% can stop the USD in its tracks if it is rallying.

Wednesday Dec. 24
US Jobless Claims
Forecast 291K
Previous Week: 289K

The rest of the week is going to be light in terms of fundamental factors. Beware, high volatility can occur in lower liquidity periods. We can’t expect quiet trading simply because part of the world is on holiday.

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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.