Weekly Outlook: 2017, December 24 - December 31

The last week before the holidays saw the dollar mostly lower, with the exception of the Japanese yen. What’s next? The last week of 2017 is a holiday week that features low trading volume and liquidity. This usually results in quiet trading, but can also see surprising sparks. There are very few events, but they could trigger an outsized response given the conditions.

1. US CB Consumer Confidence: Wednesday, 15:00.
2. US Pending Home Sales: Wednesday, 15:00.
3. US jobless claims: Thursday, 13:30. This weekly barometer of the labor market disappointed with a jump to 245K last time. We could see it sliding back to the 230Ks now.
4. Chicago PMI: Thursday, 14:45. This purchasing managers’ index is usually overshadowed by bigger events but could have its say this time. After standing at the high level of 63.9 points in November, the fresh release for December will find it hard to reach higher ground. However, it had already reached higher ground. The 50-point mark separates growth from contraction.
5. German CPI: Friday, during the European morning with the final release coming at 13:00. Prices in Europe’s third-largest economy rose by 0.3% in November and its early publication will shape the numbers for all the euro-zone. Draghi’s dovishness is based on poor inflation in the euro-zone. We’ll now get an early look while liquidity is super-low just ahead of the New Years’ Party.

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EUR/USD traded higher in the last week before the holidays. Will it continue higher in the last week of 2017? We have some inflation figures just before the New Year. Here is an outlook for the highlights of this week.

1. ECB Economic Bulletin: Thursday, 9:00. The European Central Bank publishes data that it uses in its rate decision, providing further insights about the state of the euro-zone economies.
2. German CPI: Friday, during the European morning with the final release coming at 13:00. Prices in Europe’s third-largest economy rose by 0.3% in November and its early publication will shape the numbers for all the euro-zone. Draghi’s dovishness is based on poor inflation in the euro-zone. We’ll now get an early look while liquidity is super-low just ahead of the New Years’ Party.
3. Spanish Flash CPI: Friday, 8:00. The fourth-largest economy in the euro-zone saw a bump up in inflation back in November, with 1.7% y/y. A slide back to 1.5% is on the cards in the first release for December.
4. Monetary data: Friday, 9:00. M3 Money Supply, or the amount of money in circulation, stood at a stable annual growth rate of 5% y/y. A small drop to 4.9% is on the cards. Growth in private loans stood at 2.8% and is now predicted to pick up to 2.8%. In theory, a higher velocity of money implies higher inflation in the future.

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