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Weekly Outlook: 2018, January 14 - January 21

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by , 01-14-2018 at 03:17 PM (594 Views)
The dollar suffered across the board in the second week of 2018. Will it remain under pressure? The upcoming week features housing data and consumer confidence from the US, Chinese GDP, and other market-moving events. Here are the highlights for the upcoming week.

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  1. UK inflation report: Tuesday, 9:30. Britain stands out among developed countries by suffering from elevated inflation. Year over year CPI surpassed the 3% threshold in the reading for November, above the 1-3% range. Rising inflation has already triggered a rate hike in November, but the BOE seems reluctant to make additional tightening given the uncertainty resulting from Brexit and the slowing economy. Another rise in this important report that concludes 2017 may force the BOE to rethink. A small drop to 3% is expected.
  2. Empire State Manufacturing Index: Tuesday, 13:30. A level of 18.5 is predicted.
  3. Canadian rate decision: Wednesday, 15:00. The Bank of Canada is expected to raise interest rates for the third time in this cycle, from 1% to 1.25%. In the previous rate decision, it seemed like BOC Governor and his team were in for a long pause after normalizing rates back to 1% in mid-2017. However, recent economic data has been quite impressive: the economy gained some 79K positions in both November and December. The recent BOC Business survey was quite bullish, pointing to rapid expansion. Alongside a significant rise in oil prices, the time seems ripe for tightening by the Ottawa-based institution. A surprise “no-change” will hurt the C$. A rate hike is basically priced in and the response in case of a hike will depend on the prospects for further moves.
  4. Australian jobs report: Thursday, 00:30. A modest gain of 15.2K jobs is on the cards. The unemployment rate carries expectations for remaining at 5.4%.
  5. Chinese GDP: Thursday, 2:00. A minor slide to 6.7% is forecast.
  6. US housing data: Thursday, 13:30. Building permits are projected to slide to 1.29 million while housing starts are predicted to drop to 1.27 million units annualized.
  7. Crude Oil Inventories: Thursday, 16:00. With the prices of black gold hitting new highs, this release is important not only for loonie traders but also for the US dollar: there is often an inverse correlation between oil prices and the greenback.
  8. US consumer sentiment: Friday, 15:00. A score of 97.2 is expected.

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