A fresh new year ahead with interesting economic issues to roll out. In 2015, the U.S. dollar was gainful against most of the other major following the Federal Reserve historical rate hike. In addition, the China’s stock market turmoil, the oil crisis and the Swiss National Bank surprise move to remove the peg from the Swiss franc against the euro are some of the economic facts that will remain in history. During 2016, the global economy will continue to face the below target level inflation rates.
The U.S. dollar ended 2015 with a more than 17% annual gains against the Canadian dollar and recorded more than 9% gains versus the Euro, the Australian dollar and the New Zealand dollar. It only fell slightly against the Swiss franc while it gain 0.6% against the Japanese yen and 3.4% against the British pound.
The [B]EUR/USD[/B] traded unchanged the last few weeks, continuing the lack of movement due to the Christmas – New Year season. Early in the Asian session, the pair is trading slightly below the key level of 1.0900 following the strong rebound from the 1.0800, which coincides with the 200-SMA on the 4-hour chart.
The [B]GBP/USD[/B] pair is trading flat this morning, having gapped lower over the weekend. It is very significant that the pair is trading below the lower boundary of the sloping channel, as well as the 50-SMa on the 4-hour chart and the 1.4850 level. The break through the aforementioned obstacles provided a renewed bearish signal, which I believe that could add further pressure to the pair in the upcoming week.
The Canadian dollar which suffered in 2015 against the greenback is trading in 12-year low. We expect the [B]USD/CAD[/B] to remain under buying pressure the upcoming week, with the first target being the critical level of 1.4000.
[B]During 2016, there’s much we are looking forward to bringing to you - Don’t miss our Market Outlook for 2016, which you will be able to find on JFD Research website. In addition to the market forecasts for 2016, our Research team will announce the new webinars for 2016, where you can also find on the Research website. Videos, reports and much more will follow in 2016![/B]
[B]THE WEEK AHEAD[/B]
Heading to the first week of 2016, the schedule seems to be flooded with fundamental news. The U.S. Non-farm payrolls report as well as Canada’s employment report will be out. In Eurozone, the inflation rate and the unemployment will be released.
[B]Today[/B], the Markit Economic will release the final Purchasing Managers Index for December’s manufacturing sector performance in U.S., Eurozone, UK, Germany and France. In UK, the mortgage approvals and the consumer credit for November. In Germany, the flash inflation rate for December is expected to pick up slightly from the month before. Going to U.S., the Markit Manufacturing PMI for December is forecasted to remain at the flash figure of 51.3 while the ISM Manufacturing PMI is predicted to rise up to 49.0 from 48.6 before.
On [B]Tuesday [/B]morning, the Bank of England will publish the credit conditions survey for the second quarter. In Eurozone, the preliminary figure for inflation rate is expected to confirm a stable positive rate. After the prices decreased by 0.1% in September which means that the Euro Area entered deflation, the inflation rose gradually to 0.2% in November and is expected to remain at 0.2% for December as well. A number above the forecasts would be beneficial for the euro and a positive sign for Eurozone’s battle with deflation.
On [B]Wednesday[/B], the Markit Economy will release the final December’s Purchasing Managers Index for the services sector and the composite indicators for U.S., Eurozone, UK, Germany and France. Going forward to the second half of the trading session, the ADP employment change for December is expected to show that the pace of hiring in the private sector slowed down in December.
The ISM Non-Manufacturing PMI for December will be printed. During the night, in Australia, the Building Permits and the Trade Balance for November will be published.
On [B]Thursday[/B], the Euro Area will attract the attention. The unemployment rate as a whole will remain at the three-year record low of 10.7% in December.
The consumer confidence is forecasted to come out at -6 from -5.9, for the same period. On the other side, the services and industrial sentiment are expected to show an improvement. The retail sales for November will also be out. A while later, the U.S. jobless weekly claims will be published.
Early on [B]Friday[/B], the German industrial production, the retail sales and the detailed trade balance will be printed. In UK, the trade balance will be released as well before the Non-farm payrolls report. The market expects the U.S. economy to have added 200,000 jobs in the public and private non-farm sectors. The wages are expected to grow by 0.2% on average in December, while the unemployment rate is expected to remain at the record low of 5%, as in November. The upcoming employment reports are important for the gradual rate hikes that are forecasted to come after the historical move of the Fed, that ended the near zero-rate era, as the labour market is strongly eyed from the central bank to gauge the economic situation.
On the same time, the Canadian employment report will be released. The unemployment rate is predicted to remain at 7.1% in December while the employment change is expected to show that 11.0k people are recently employed.