Weekly Outlook and Trading Forecast

[ForeCastle]

US Dollar: Greenback Looks in Trouble Heading into New Year
The US Federal Reserve has finally raised interest rates, and this in itself should support the US Dollar in 2016. Yet a key factor that may stand in the way of further Dollar gains is straightforward: expectations. The Fed expects it will raise rates four times in 2016, but markets predict only half of that. Whether or not the USD finishes higher will depend on this key theme.

International Equities: S&P 500, World Equities at Risk of Major Correction
Global growth has slowed considerably into the end of 2015, and yet global equity indices remain at or near record peaks. Can 2016 finally produce the significant correction which many have feared? We’ll watch a number of critical fundamental themes going forward, while our technical outlook suggests key assets are ripe for an important turn lower.

Gold Price Forecast: Sell-Off May Accelerate as Fed Likely to Hike Rates
Gold prices traded into fresh multi-year lows as the US Federal Reserve raised interest rates for the first time in eight years. Yet the immediate reaction following the highly-anticipated was relatively muted. What could continue to drive gold price trends through 2016?

Yen Forecast: Fed Rate Hikes and BoJ Action Points to USD/JPY Gains
The Bank of Japan looks likely to keep its aggressive quantitative easing policies in place through 2016, and this position stands in sharp contrast to the US Federal Reserve’s prospective interest rate hike cycle. Individually this should be enough to drive the USD/JPY higher through the New Year, but these are the key factors which will likely determine overall price trends.

Oil Price Forecast: No End in Sight for Oil Price Declines
There appears no end in sight for Crude Oil price declines, and indeed a renewed oil supply war between OPEC and North American producers may exacerbate the supply glut which has driven the major price downtrend. Unless we see a marked shift in global industrial growth, we expect the value of Crude Oil will continue lower through 2016.

more...

[1Finance]

Forex Weekly Outlook January 4-8

2016 begins with a busy calendar: Canadian employment data, US PMIs, Trade Balance, FOMC Meeting Minutes and employment data culminating with the Non-Farm Payrolls. In addition, liquidity is set to return after the holiday season. These are the highlights opening 2016. Join us as we explore these market-movers.

U.S. consumer confidence edged up to 96.5 from 92.6 in November, beating market forecasts. Current conditions improved from 110.9 to 115.3 and the Expectations Index improved to 83.9 from 80.4 in November. Overall, consumers’ assessment of the current state of the economy remains positive. Meanwhile Jobless claims increased 20,000 during the holiday week due to temporary holiday factors. Economists expected a rise of 270,000. Analysts expect a slower pace of job market improvement in 2016 despite the low unemployment rate.

1. Chinese Caixin Manufacturing PMI: Monday, 1:45. This independent report for the Chinese economy has worried investors during 2015, but did recover from the lows. After hitting 48.6 points in November, a rise to 48.9 is on the cards for December, still below the 50 point mark separating growth and contraction.
2. US ISM Manufacturing PMI: Monday, 15:00. The U.S. manufacturing activity plunged in November to its worst levels since June 2009, when the index of national factory activity declined to 48.6 crossing the 50 point line for the first time since November 2012. The previous reading was 50.5. Economists expected the index to rise to 50.6. The employment section rose to 51.3 from 47.6 in October, new orders fell to 48.9, lowest since August 2012 and the prices paid index fell to 35.5 from 39. A score of 49.1 points is expected now.
3. US ADP Non-Farm Employment Change: Wednesday, 13:15. Private sector employment increased by 217,000 jobs in November according to ADP Report. The reading topped market forecast and followed a 196,000 reading in the previous month. This was the strongest gains in the service sector since June. The increase was mainly driven by a rebound in professional/business service jobs. Job growth remains strong and the pace of job creation is twice that needed to absorb growth in the working age population. 193K is expected now.
4. US Trade Balance: Wednesday, 13:30. The U.S. trade deficit widened unexpectedly in October amid a fall in exports. The trade gap increased 3.4% to $43.9 billion, resulting from a stronger dollar. September’s trade deficit was revised up to $42.5 billion from the previously reported $40.8 billion. Economists had expected an improvement to $40.6 billion. Exports fell 1.4% to $184.1 billion, the lowest level since October 2012. Imports slipped 0.6% to $228.0 billion in October. A deficit of 44 billion is expected.
5. US ISM Non-Manufacturing PMI: Wednesday, 15:00. The U.S. service sector reflected slower business activity in November. The Institute for Supply Management’s non manufacturing purchasing-managers index fell to 55.9 from 59.1 in October. Economists expected the index to fall to 58.1. However, despite this decline, November’s reading shows the resilience of the domestic services sector. Business activity, new orders and employment components fell by more than 4 points, but still posted readings above 55.
6. US FOMC Meeting Minutes: Wednesday, 19:00. These are the minutes from the historic rate hike decision. The statement showed a unanimous vote, but perhaps the wider array of members wasn’t in full agreement. It will be important to note the sentiment towards further rate hikes in 2016. Currently, 4 hikes are foreseen according to the dot plot, while markets expect far less activity. The Fed decided to put an emphasis on inflation, and we will also learn how worried they were at the time.
7. US Unemployment Claims: Thursday, 13:30. Initial jobless claims in the U.S. increased by 20,000 last week to a seasonally adjusted 287,000. The increase was larger than the 274,000 initially expected. Meanwhile, the four-week moving average increased by 4,500 claims to 272,500. Continuing jobless claims edged up by 3,000 to a seasonally adjusted 2,198,000. A drop to 271K is predicted now.
8. Canadian employment data: Friday, 13:30. The Canadian economy shed nearly 36,000 jobs in November after a massive part-time workers hired for the October federal election were dismissed. The job losses, were four times larger than the 10,000 expected raising the unemployment rate to 7.1%, from 7% in October. While the economy lost 72,000 part time workers, it also gained 36,000 full-time employees, suggesting the picture is not as bad as it looks. A gain of 10.4K jobs and steady unemployment rate at 7.1% are predicted now.
9. US Non-Farm Employment Payrolls: Friday, 13:30. The last NFP report showed a 211,000 jobs gain in November, beating forecasts for a 201,000 increase, keeping the unemployment rate steady at 5%. The solid job gain was exactly what the Fed needed to make the call to raise rates on their December meeting. Wages increased 2.3% year-over-year in November a bit lower than the 2.5% rise posted in October showing a growth trend. A gain of 202K jobs is predicted with a steady unemployment rate of 5%. Wages are expected to rise 0.2% m/m once again. While no hike is expected in the January meeting, this feeds into the March decision.

the source

[1Finance]

Full list of high-impact events taking place this week:

---------------------------
Monday 4th
---------------------------

1:45am GMT - Caixin Manufacturing PMI
9:30am GMT - UK Manufacturing PMI
3:00pm GMT - ISM Manufacturing PMI

---------------------------
Tuesday 5th
---------------------------

9:30am GMT - UK Construction PMI.
Tentative - GDT Price Index.

---------------------------
Wednesday 6th
---------------------------

9:30am GMT - UK Services PMI
1:15pm GMT - US Non-Farm Employment Change
1:30pm GMT - Canadian Trade Balance
1:30pm GMT - US Trade Balance
3:00pm GMT - US ISM Non-Manufacturing PMI
7:00pm GMT - FOMC Meeting Minutes

---------------------------
Thursday 7th
---------------------------

12:30am GMT - Australian Building Approvals and Trade Balance
1:25am GMT - BOC Gov Poloz Speaks
1:30pm GMT - US Unemployment Claims

---------------------------
Friday 8th
---------------------------

12:00am GMT - Australian Retail Sales
1:30pm GMT - Canadian Building Permits, Employment Change and Unemployment Rate
1:30pm GMT - Average Hourly Earnings, Non-Farm Employment Change and Unemployment Rate

[ForeCastle]

Euro Forecast: Focus for EURGBP, EURUSD Turns to BOE, Fed Meetings
With Euro-area March PMI reports due on Friday, traders’ attention for most of the week will be the latest Brexit developments, the BOE rate decision, and the Fed meeting.

Australian Dollar Forecast: Australian Dollar Could Slide Again If RBA Speakers Stay Dovish
The Australian Dollar may well face renewed pressure if the week's central bank speeches again highlight the utility of a weaker currency. Stronger data may help the bulls’ cause though.

Crude Oil Forecast: Crude Oil Price Outlook Clouded by OPEC Meeting, Fed Rate Decision
The dominant uptrend in crude oil prices face a cloudy week ahead. Potential gains on the weekend OPEC+ joint meeting may be offset by US Dollar strength on the Fed rate decision.

British Pound Forecast: Brexit Meaningful Vote - Third Time Lucky?
Brexit will continue to dominate the domestic scene, putting the latest Bank of England policy decisions in the shade. Meaningful Vote 3 is expected to be voted down again, leaving PM May increasingly isolated.

US Dollar Forecast: EUR/USD Rate Outlook Hinges on FOMC Forward-Guidance
The EUR/USD rebound following the ECB meeting appears to have stalled ahead of the FOMC interest rate decision, with the Fed slated to unveil its updated forecasts.

Gold Forecast: Gold Price Forecast: Where Will XAUUSD Breakout Next?
While the spot gold price chart shows consolidation at its current level, looming fundamental drivers could ignite the next move in XAUUSD.

Equities Forecast: Dow Jones, S&P 500, FTSE 100 and DAX 30 Fundamental Forecast
With the major equity indices simultaneously testing technical resistance, catalysts will be found from fundamental developments in the week ahead.

more...

[ForeCastle]

Crude Oil Forecast – Crude Oil May be Overextended, But Watch Out For Trade Headlines
Crude oil prices remain supported by supply cuts and trade deal hopes even as the economic data have proven disappointing. That support could wane a little this week.

British Pound Forecast – GBP/USD Rate Threatens Bull Trend Ahead of Brexit Deadline
The British Pound may face a more bearish fate ahead of the Brexit deadline in April as the GBP/USD exchange rate threatens the upward trend from late last year.

US Dollar Forecast – US Dollar May Rise as Sentiment Succumbs to Potent Headwinds
The US Dollar may rise, spurned on by haven-seeking capital flows as risk appetite finally succumbs to a broad assortment of potent headwinds.

Gold Forecast – Gold Price Outlook Bearish as USD May Rise on Soft Econ Data, RBA
Gold prices could be weighed down if the US Dollar rises in risk aversion on soft economic data. Other hazards for the precious metal include a more dovish RBA and Brexit updates.

Equities Forecast – Dow Jones, FTSE 100, DAX 30 and ASX 200 Fundamental Forecast
The Dow Jones will look to a slew of economic data out of the United States while the FTSE and DAX await Brexit clarification. Elsewhere, the ASX 200 awaits a rate decision from the RBA.

more...

[ForeCastle]

Crude oil dipped 1.17 percent to $62.15/bbl over the last 5 trading days, inking back-to-back weekly losses for the commodity. The primary driver of recent downside could be attributed to reports from the EIA that crossed the wires during Thursday’s session which stated US crude stockpiles skyrocketed 9.9m/bbl to their highest level since September 2017.



Ballooning crude oil production in the US now tops 12m/bpd and largely contributed to the recent bulge in oil inventories. The trend looks to continue after the Trump administration announced that the Interior Department released a fresh set of regulations last week that makes offshore oil drilling easier for energy companies. That being said, the updated EIA short-term energy outlook report is due for release on May 7 and looks to provide oil market participants with the latest comprehensive insight over potential supply and demand imbalances.

more...

[ForeCastle]

Abarrage of high-impact economic data points next week spanning US, Swiss and Canadian GDP reports, German jobs numbers, inflation data out of the US and Germany in addition to China’s manufacturing PMI could very well dictate where oil prices head from here. Sentiment may remain damaged if the market-moving data fails to inspire appetite for risk and expected demand for oil which could further threaten bullish prospects.



Although, a weakening US Dollar could pose as a positive tailwind to crude oil price gains. US Iran friction heating up may also bring upside to oil prices as it would likely crimp supplies. Additionally, crude could get a boost from building speculation over extended OPEC production cuts as the oil cartel’s next meeting on June 25 in Vienna draws nearer.

more...

[ForeCastle]

US Dollar (USD) Weekly Forecast: Fed to Confirm Interest Rate U-Turn
The US dollar (USD)is biding time ahead of next week’s FOMC monetary policy decision where it is expected that Chair Jerome Powell will indicate that interest rate cuts are coming with the July meeting the most likely starting point.

S&P 500, FTSE 100 Outlook: Trade War Deadline, Brexit Vote, Fed Powell Testimony in Focus
S&P 500, DAX and FTSE 100 look to Fed, ECB and BoE monetary policy outlook.

Euro at Risk as the ECB Sets Up for a Dovish Policy Trajectory
The Euro may come under pressure as the ECB Forum drafts a dovish policy path while EU bigwigs pick its next President with an eye on that vision’s execution.

Australian Dollar Won't Be Spared By This Week's Focus On the Fed
The Australian Dollar faces too many headwinds for anything other than bearishness now, even if the Fed may take some attention away from it in the coming week.

GBPUSD Rate Outlook Hinges on Bank of England (BoE) Forward Guidance
The Bank of England (BoE) meeting on June 20 may shake up the near-term outlook for the British Pound if the central bank alters the forward guidance for monetary policy.

Crude Oil Prices May Seesaw Between Iran Politics, Growth Sentiment
The Euro put in for a notable retreat through the second half of last week, but its reversal is not as intense as EURUSD may insinuate. Will momentum spread in the week ahead?

more...

[ForeCastle]

Gold Prices Target 2019 High as Fed Sets Course to Cut Interest Rates
Fresh data prints coming out of the US may do little to curb gold prices as the Federal Reserve appears to be on a preset course to reduce the benchmark interest rate.

Crude Oil Prices May Oscillate Between Iran Risks, China GDP
Crude oil prices may find themselves oscillating between political risk in Iran and weak economic data, which might create selling pressure in the cycle-linked commodity.

Australian Dollar Faces Busy Week, But Probably No Game Changer
From RBA minutes through to employment data and Chinese growth numbers, this won’t be a quiet time for Australian Dollar watchers.

Dow Jones, Nasdaq 100, S&P 500, DAX 30 Fundamental Forecast
Earnings season has arrived, and the Dow Jones, Nasdaq 100 and S&P 500 will pay close attention the country’s largest stocks and their quarterly performances.

US Dollar May Rise as Worried Markets Search For Safe Harbor
The US Dollar may rise as investors’ focus shifts from the likelihood of Fed rate cuts to the reasons for them, souring sentiment and boosting demand for haven assets.

more...

[ForeCastle]

US Dollar Price Outlook Eyes Trade War, Data Induced Fed Cuts
The US Dollar stumbled last week and is at risk of further downside if US-China trade tensions worsen and high-impact economic data due for release disappoints which stand to accelerate Fed rate cut bets.

Rising ECB Rate Cut Odds Can’t Hold Down the Euro
The fact of the matter is, the Euro’s appeal may simply boil down to the current market environment being a situation analogous to the notion that it is one of the ‘cleaner shirts in the dirty laundry.’

AUD Braces for Escalating Trade War Tensions, Employment Data
The Australian Dollar may face increased selling pressure if local jobs data disappoints against the backdrop escalating tensions in the US-China trade war.

GBPUSD Rate Vulnerable to Slowing UK Inflation, Retail Sales
Fresh data prints coming out of the UK may do little to heighten the appeal of the British Pound amid the growing threat of a no-deal Brexit.

Crude Oil Prices at Risk as US-China Trade War Sours Growth Bets
Crude oil prices look vulnerable to deeper losses after hitting a seven-month low as US-China trade war escalation sours the outlook for global economic growth.

Gold Price Weekly Forecast: Bullish Breakout Remains In-Play
Gold is currently consolidating just under $1,500/oz. after hitting a six-and-a-half year high of $1,511/oz. earlier this week. Positive fundamentals remain but markets don’t move in a straight line.

Dow Jones, DAX 30, FTSE 100 Forecasts for the Week Ahead
As trade wars and monetary policy look to maintain their position at the helm, markets will be offered insight on another major theme that could rattle fragile sentiment.

more...