Key Fundamental Factors this Week (2/9-2/13)

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Key Fundamental Factors this Week (2/9-2/13)

Last week, US NFP surprised to the upside, not only with January’s reading, but with the strong revisions to December’s and November’s readings. The USD ended the week taking back some of the losses in the past week. Let’s see what’s in store for us this week in terms of fundamental factors.

Tuesday 2/10

AUS NAB Business Confidence (January)
Previous: 2
aus nab business confidence
(click to enlarge; source: forexfactory.com)

Business confidence may have bottomed after a 4 month slide. Let’s see if the reading can stay above 0 and start heading higher. The AUD is not likely going to be supported simply by a strong business confidence reading per se, but a good release can start slow down the AUD’s decline, or give an existing pullback a little nudge.

UK Manufacturing Production m/m (Dec.)
Forecast:0.3%
Previous: 0.7%

UK Manufacturing data has been volatile month to month. A 0.3% reading would unimpressive but not negative. For the GBP, the market is more likely to be awaiting the BoE inflation report on Thursday (2/12).

Wednesday 2/11

Eurogroup Meetings: What will the issues be? Certainly Greece and Greek debt will be one of the focuses for the currency market.

Thursday 2/12

AUS Employment Change (Jan.)
Forecast: -4.7K
Previous: 37.4K
aus employment data
(click to enlarge; source: forexfactory.com)
AUS Unemployment Rate (Jan.)
Forecast: 6.2%
Previous: 6.1%
Labor market conditions likely deteriorated in January after a few decent months. The AUD continues to be weak, so the market seems to be pricing in poor data anyway. A positive reading should give the AUD some support especially if it is bearish heading into the employment data.

BoE Inflation Report: Last week’s BoE meeting didn’t provide much information. The inflation will be more important because it will reveal the MPC’s inflation and growth projections. Last time, the BoE lowered its inflation and growth projections and caused a slide in the GBP that seems to have stalled in the past couple of weeks. Will economic and inflation outlook be buoyed? If so, the GBP’s rebound has been justified, and it can stay hovering above short-term price bottoms. Otherwise, if MPC’s assessment is pessimistic, the next rate hike might be even after mid-2016, which is the projection for many at the moment. This in turn should pressure the pound. Let’s see what BoE Gov. Mark Carney has to say in his statement.

US Retail Sales (Jan.)
Forecast: -0.3%
Previous: -0.9%
us retail sales jan. 2015
Core Retail Sales (Jan.)
Forecast: -0.4%
Previous: -1.0%
Retail sales data for December disappointed. Part of it was slower sales, but part of it was also because the holiday shopping season has crept into November, so December’s numbers were inevitably going to be unimpressive. But it as more than just that – it was very disappointing and introduced doubt about the FOMC’s ability to raise rates by mid-2015, especially when other central banks start being more dovish, cutting rates, and increasing stimulus.

Now, the FOMC lifted those doubts last week with a monetary policy statement that suggested the bank is still on pace to raise rates mid-year. If retail sales data is positive for January, the USD will likely go on another bull run this week. Otherwise, if might still drift higher, or consolidate. With strong jobs data last Friday from the US, it will be unlikely for the USD to be bearish next week.

Jobless Claims 
Forecast: 279K
Previous week: 278K

Friday 2/13

German Prelim GDP q/q (Q4)
Forecast: 0.3%
Previous: 0.1% (Q3)
german gdp q/4
(click to enlarge; source: forexfactory.com)
Q3 GDP was weak, and essentially flat. Q2 GDP was actually -0.2%. So a reading of 0.3% while unimpressive would be in the right direction. A reading above 0.5% for example, should give the euro a slight boost especially if was bearish heading into the release. A reading of 0.1% or lower might send the euro further lower, or cap a pullback from extending higher.

Eurozone Flash GDP q/q (Q4)
Forecast: 0.2%
Previous: 0.2%

US UM Consumer Sentiment (Feb.)
Forecast: 98.2
Previous: 98.1
umich sentiment
(click to enlarge; source: forexfactory.com)
We continue to see improvement in sentiment. Economic data does support this improvement.

Previous Post by Author: USD/CHF Should Continue to Recover after the Strong NFP

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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.