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Weekly Outlook: 2014, February 02 - 09

This is a discussion on Weekly Outlook: 2014, February 02 - 09 within the Forex Trading forums, part of the Trading Forum category; Euro Risks Market-wide Collapse as EURUSD, EURJPY Break Lower Fundamental Forecast for Euro: Bearish Monetary policy concerns were stoked by ...

          
   
  1. #1
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    Weekly Outlook: 2014, February 02 - 09

    Euro Risks Market-wide Collapse as EURUSD, EURJPY Break Lower



    Fundamental Forecast for Euro: Bearish

    • Monetary policy concerns were stoked by record low inflation last week, and the ECB will deliberate on policy Thursday
    • Strong capital inflows into riskier Eurozone assets have yet to be reversed, but are imminently endangered by volatility


    Weekly Outlook: 2014, February 02 - 09-euro_risks_market_wide_collapse_as_eurusd_eurjpy_break_lower_body_picture_1.png


    A mild slip by the euro this past week started to evolve into a serious tumble through Friday’s close. With the EURUSD closing below 1.3500 and EURJPY well south of 140, the world’s second most liquid currency is at risk of a more pervasive and directed selloff in the week ahead. While the technical cues were important to start the ball rolling, a dive of magnitude and persistence requires key fundamental development. As it happens, the baseline for both of the most pressing fundamental issues – financial market stability and relative monetary policy bearings – carry a bearish predilection for the euro.

    The greatest risk to the Euro moving forward is the same danger that the S&P 500 and yen crosses are fixated on: concerted risk aversion. Why would we list the world’s second most liquid currency with high-yield and fundamentally unstable currencies? Excessive capital inflows. Similar to the performance of the US equity markets – but to a smaller scale – some of Europe’s riskiest assets have drawn a steady tide of foreign investment. Specifically, the sovereign bonds of the Eurozone’s periphery (Spain, Italy, Greece, etc) have attracted global investors who are seeking out higher returns.

    In a speculative landscape where global yields were historically deflated, the risk of adverse market shocks have been checked by central bank stimulus and money managers have to beat impossible benchmarks like S&P 500; Eurozone government debt looked particularly attractive. After policy officials finally curbed panic of an imminent bankruptcy or departure from one of its Union’s members (the turning point seems the introduction of the ECB’s OMT program), ambitious investors found significant discounts (high yields) on the region’s debt. Investors funneled capital into the depressed assets reassured by global volatility levels at their lowest levels since 2007 and the perceived safety of ‘sovereign’ debt.

    Yet, like the record highs notched by equities and leverage, there is a point of ‘oversaturation’. Yields in the periphery are now pushing multi-year lows while Spanish and Italian 2-year rates are at record lows. That is remarkable given the formers record unemployment rate (above 25 percent) and the latter’s unprecedented debt load. Further gains on these assets – along with many other Euro-area markets – are likely to be limited moving forward. If everything were to remain steady in the global financial markets, the euro would likely slowly deflate to find equilibrium. However, recent tumult suggests we are unlikely to have such a smooth adjustment.
    The jump in volatility and increasingly correlated corrections across different asset classes over the past few weeks suggests sentiment is wavering and at risk of a more dramatic correction. If confidence falters, over-leveraged, fundamentally-unsound, and over-valued assets will be unwound rather quickly. The recent swell of European appetite will certainly fall victim to such a tide change.

    In the absence of a concerted risk aversion drive – admittedly, I have been waiting for some time – the Euro’s outlook may still carry a bearish bias. The other fundamental theme of prominence for the FX market is relative monetary policy. At their last rate decision in November, the ECB decided to cut lending rates in response to a sudden drop in inflation. This past week, the Eurozone’s CPI reading hit a 0.7 percent record low while unemployment held at a record high 12.1 percent.

    Heading into this week’s policy meeting, there is virtually no expectation of further rate cuts – whether to the benchmark or deposit rate (which has garnered significant attention as a negative rate was entertained as an option). Further easing of this type would likely be ineffective. Furthermore, it wouldn’t answer the more prominent concern. With Troika-bailed countries exiting their rescue programs (some refusing precautionary lending lines), growth still severely imbalanced, business lending contracting, short-term yields rising and liquidity shrinking; there is ample reason for the ECB to introduce a new, targeted stimulus program. In the end, whether the policy lean is aggressive or passive, it is still dovish. And, against a Fed Taper and BoE hike speculation, that is a bearish contrast.
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  2. #2
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    US Dollar to Test Fresh Highs on Critical Week for Financial Markets



    Fundamental Forecast for US Dollar: Bullish

    • Dollar breaks higher versus Euro, 3 key factors favor further strength
    • Dow Jones FXCM Dollar Index responds well to key technical support
    • Key US Nonfarm Payrolls Report may hold the key for USD performance in week ahead


    Weekly Outlook: 2014, February 02 - 09-us_dollar_to_test_fresh_highs_on_critical_week_for_financial_markets_body_picture_5.png


    The US Dollar bounced sharply off of recent lows as a fresh round of “Taper” from the US Federal Reserve boosted outlook for the Greenback. Pronounced emerging market turmoil and S&P 500 declines may likewise favor USD gains into a key week of trading.


    A highly-anticipated US Nonfarm Payrolls report and three major central bank meetings promise event-driven volatility in the days ahead. Yet it was a handful of not-so-major central banks that drove the biggest financial market moves through the past week of trading.

    A fresh currency and banking crisis in Argentina spooked investors in other markets, and we soon saw seemingly-unrelated currencies such as the South African Rand and the Russian Ruble lose ground against the safe-haven US Dollar. EM central bankers hiked rates aggressively in a bid to stabilize their currencies, but in some cases the opposite occurred as investors panicked. Where does this leave us?

    Nothing in financial markets exists in a vacuum; further tensions in the EM world could easily affect moves in the Dollar and broader global asset classes. Thus we’ll watch whether pairs such as the USDZAR stabilize in the face of real dangers.
    The US Federal Open Market Committee (FOMC) made no reference to EM troubles as it announced a fresh $10B in “Taper” of Quantitative Easing purchases. In doing so the Fed made it fairly clear that it was not especially concerned over market volatility or a dismal December US employment report. All else remaining equal, we believe that consistent Taper from the FOMC will boost the US Dollar versus major counterparts.
    The recent FOMC decision and attached statement dispelled a great deal of uncertainty over future policy, but traders will nonetheless watch Friday’s US NFPs report to gauge the likelihood of further Fed tightening. Consensus forecasts call for a modest jobs gain in the January data; December’s sharply disappointing result suggests that hiring should rebound in the first month of 2014. Suffice it to say, two consecutive NFPs disappointments could shake confidence in the US economic recovery and the Dollar.
    It will be important to see that upcoming Reserve Bank of Australia, European Central Bank, and Bank of England meetings likewise show little concern over market volatility. Fresh action from the RBA, ECB, or BoE seems unlikely, but traders remain skittish and any surprises in either policy or commentary could spark major moves.
    The Dollar seems poised to test fresh peaks versus major counterparts as the Fed tightens policy and markets remain tense. Yet a busy week of event risk and a sharp gain in FX volatility prices suggests that price action could take many turns. Traders may look to keep leverage low and control risk in what promises to be another eventful week for financial markets.
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    Australian Dollar Outlook Clouded Ahead of Critical Event Risk



    Fundamental Forecast for Australian Dollar: Neutral

    • RBA Rate Decision on Tap Domestically, Policy Statement in the Spotlight
    • Impact of US Data on QE Taper Bets, EM-Driven Risk Aversion Also Critical


    Weekly Outlook: 2014, February 02 - 09-australian_dollar_outlook_clouded_ahead_of_critical_event_risk_body_picture_1.png



    The Australian Dollar faces a perfect storm of fundamental event risk in the week ahead, with major trend-defining developments on the domestic and the external front. That makes for a clouded outlook in the week ahead, with the presence of sharp seesaw volatility shaping up to be the only thing that can be deduced with confidence.

    First, the Reserve Bank of Australia (RBA) is due to deliver its monthly policy announcement. Economists forecast that policymakers will keep the baseline lending rate unchanged at 2.5 percent. Investors seem to agree, with priced-in expectations (as tracked by Credit Suisse) showing a mere 6 percent probability of rate cut and no policy changes over the coming 12 months.
    That puts the spotlight on the statement accompanying the announcement. Australian economic news-flow began to dramatically deteriorate relative to expectations in January; if this translates into a dovish turn in official rhetoric, the Aussie seems likely to find itself under pressure. The year-on-year CPI inflation rate hit a two-year high at 2.7 percent in the fourth quarter however. That puts baseline price growth just a hair below the RBA’s upper target limit of 3 percent, which seemingly argues against further easing in the near term.

    Turning to external forces, a slew of top-tier US economic data releases threaten to generate volatility amid speculation about the future course of Fed QE “tapering” efforts. January’s manufacturing and service-sector ISM figures as well as the all-important Nonfarm Payrolls print headline the docket. The Fed went out of its way to cement the idea that a soft patch in late 2013 would not delay the stimulus reduction process.

    Investors took that message at face value, writing off December’s disappointing round of key data points as an anomaly within a broadly firming recovery. That argument will be difficult to sustain if news-flow continues to register on the soft side however. On balance, firm results may prove AUD-negative if they prove to spark a recovery in US Treasury rates, narrowing the Australian unit’s yield advantage. Needless to say, weak results stand to yield the opposite result. Finally, continued churn in the risk sentiment space represents yet another driving catalyst for Aussie price action. A formidable correlation between the MSCI Emerging Markets stock index and a trade-weighted average of the Australian Dollar’s average value against its top counter-parts speaks to the currency’s vulnerability to risk aversion. The speculative equities benchmark closed last week at the softest level in five months after a second consecutive week of aggressive selling. If liquidation continues, the AUD may well sink along with the spectrum of assets geared toward underlying investor confidence.
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    Gold Responds to Key Resistance Ahead of NFPs- Bearish Below $1270



    Fundamental Forecast for Gold: Bearish

    • FOMC Setups - EUR, CAD, Gold Eye Key Dollar Inflection Points
    • Gold at Risk of Failed Breakout; 1231 is Significant


    Weekly Outlook: 2014, February 02 - 09-gold_responds_to_key_resistance_ahead_of_nfps-_bearish_below_1270_body_picture_5.png



    Gold is markedly lower this week with the precious metal down 2.36% to trade at $1240 ahead of the New York close on Friday. The move marks the first weekly loss in six after bullion reversed off key resistance earlier in the week. All eyes now turn back to the US economic docket with the non-farm employment report in focus as we open up February trade.

    The FOMC policy meeting on Wednesday was the highlight of the week with the central bank moving to taper QE installments by another 10billion, bringing the asset purchase program to a total of 65billion. This was the last meeting for Mr. Bernanke as central bank chairman with Janet Yellen set to be sworn in on Monday morning. The policy statement remained rather upbeat despite speculation that we may see the Fed soften its taper talk on account of the dismal December employment report. The decision for the central bank to continue scaling back on its accommodative measures suggest that the committee views the weak report as a one off type event and markets will be looking ahead to US data for further guidance on future monetary policy. Objectively speaking, taper expectations are likely to cap gold advances in the near-term.

    Gold traders will closely eyeing the economic docket next week with ISM manufacturing, Factory orders and trade balance data on tap ahead of the highly anticipated non-farm payrolls report on Friday. Consensus estimates are calling for a print of 180K for the month of January, up from just 74K in December with the unemployment rate widely expected to hold at 6.7%. Look for at-expectation prints and better to continue weighing on gold prospects with a weak read (specifically on employment) likely to be supportive. Bottom line, despite next week’s event risk the metal has now come into a key threshold of technical resistance and this mark will remain paramount as we head deeper into the first quarter.
    From a technical standpoint, gold has now responded to a critical level of resistance we have been eyeing for weeks at $1268/70. Our focus remains weighted to the downside while below this mark as we head into February trade with the monthly opening range likely to offer further conviction. Interim support rests at $1240 with a move sub-$1231 offering further conviction of our directional bias. Support targets are seen at $1217, 1207 and $1179/80. That said, we will respect a breach/close above $1270 with such a scenario suggesting a more significant low was put in back in December and invalidating our broader outlook. Topside targets at $1287, $1315, and $1325/30.
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    Japanese Yen Volatility Near Guaranteed on Huge Week for Markets



    Fundamental Forecast for Japanese Yen: Neutral

    • Japanese Yen surges, and we see key reasons why it could continue higher
    • Cyclical market studies point to a potentially critical week for the USDJPY exchange rate


    Weekly Outlook: 2014, February 02 - 09-japanese_yen_volatility_almost_guaranteed_on_huge_week_for_markets_copy_body_picture_3.png


    The Japanese Yen took the forex world by storm as it rallied against all major currency counterparts, finishing the week at monthly highs versus the US Dollar and Euro. A busy economic calendar ahead and a build in FX volatility prices points to another big week for the Japanese currency and broader markets.

    Price action reminded us that nothing can go up (or down) in a straight line as the USDJPY moved virtually tick-for-tick with the S&P in retracing some of their recent gains. The critical question becomes whether this is merely a correction within a much larger USDJPY and equity market bull market or the start of a larger Japanese Yen and ‘risk’ reversal.
    We see several key factors that suggest the JPY may yet rally to fresh highs versus the Euro and US Dollar. Yet the coming week’s US Federal Open Market Committee (FOMC) interest rate decision and Japanese Consumer Price Index (CPI) Inflation data may set the tone for Japanese Yen moves through the foreseeable future.
    All eyes turn to the FOMC as nervous investors digest recent stock market sell-offs and whether Fed officials will continue the “Taper” of its Quantitative Easing purchases. A Bloomberg News poll shows that 67 of 71 economists believe the Fed will enact at least another $10B in Taper. Given that the Taper is mostly bullish for the US Dollar and domestic interest rate expectations, we expect a “No-Taper” decision could send the USDJPY to fresh lows.
    Yen volatility will likely continue into the following day as a highly-anticipated Japanese CPI inflation report could spark big USDJPY moves. The Bank of Japan’s Quantitative Easing measures have been a major driver of JPY declines (USDJPY gains), but recent inflation readings warned that rising price pressures may prevent the BoJ from enacting more aggressive QE policies. The consensus forecast calls for core CPI inflation to remain at 5-year highs through December, but any topside surprises could quickly drive further Yen gains.

    It’s shaping up to be a big week for the Japanese currency, and our Senior Strategist highlights major price levels at which the USDJPY pullback could accelerate. We’ll keep a close eye on economic data and whether financial markets can recover from recent turmoil. It’s especially worth noting that S&P 500 performance in the month of January has predicted February-December moves with just over 60 percent accuracy. We’ll keep the so-called “January Effect” in mind as we watch how stocks finish into the final days of the month.
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    GBP Continues to Carve Higher Lows Ahead of BoE- Fresh High on Tap?



    Fundamental Forecast for the British Pound: Bullish

    • British Pound Mixed after ‘In-Line’ 4Q GDP Reading
    • Cycle turn window in GBP/USD


    Weekly Outlook: 2014, February 02 - 09-gbp_continues_to_carve_higher_lows_ahead_of_boe-_fresh_high_on_tap_body_picture_5.png


    The British Pound appears to be carving a higher low ahead of the Bank of England (BoE) February 6 meeting as the central bank is widely expected to normalize monetary policy ahead of schedule.

    The Monetary Policy Committee (MPC) interest rate decision may reinforce the bullish sentiment surrounding the sterling as the central bank moves away from its easing cycle, but we may see a limited market reaction to the meeting should the BoE refrain from releasing a policy statement. In turn, the quarterly inflation report due out on February 12 may have a larger impact on the policy outlook, and the GBPUSD remains at risk of a larger correction over the near-term should the fundamental developments coming out of the U.K. dampen expectations of seeing a rate hike later this year.
    Indeed, there’s growing bets that the MPC will implement a more dovish twist to its forward-guidance as the U.K. jobless rate quickly approaches the BoE’s 7% threshold for unemployment, but Governor Mark Carney may take a more aggressive approach in addressing the risk for an asset-bubble as the central bank head sees a further pickup in housing throughout 2014.

    With that said, the technical outlook continues to favor the topside targets for the GBPUSD as it retains the bullish trend dating back to July, and the British Pound looks poised for a more meaningful at the 1.6700 handle as it puts in another higher low above the 1.6400 region.
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  7. #7
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    Canadian Dollar To Consolidate Ahead of GDP Report



    Fundamental Forecast for Canadian Dollar: Neutral

    • USD/CAD Pullback May Yield Long Entry
    • US New Home Sales Rose to 417K; USDCAD Mixed
    • Canadian Dollar Gains after March CPI Slows down


    Weekly Outlook: 2014, February 02 - 09-canadian_dollar_to_consolidate_ahead_of_gdp_report_body_picture_1.png



    The Canadian dollar strengthened this week against its U.S. counterpart on an improved economic outlook in the U.K. and U.S. Britain managed to avoid a triple-dip recession, recording a positive growth rate in the first quarter. Meanwhile, the U.S. jobless claims report came out better than expected as first-quarter GDP grew at a moderate rate, further helping to push the loonie higher. Also, Crude oil, Canada’s biggest export, rebounded, and hit its highest level in two weeks. Looking forward, we may see the Canadian dollar consolidate and build a short-term base before making another major move to the upside.

    Canada’s February Gross Domestic Product highlights the biggest event risk for the week ahead. According to a Bloomberg News survey, economists have called for a consensus estimate of 0.2 percent growth in GDP, the same pace as in the previous month. In his last testimony before parliament, Bank of Canada Governor Mark Carney said that “Canada’s economy is strong but still faces risks.” Furthermore, signs of improvement in the domestic economy have materialized recently, with positive data in the manufacturing and sales sectors. At the same time, the latest unemployment rate report indicates that the recovery in the labor market remains slow. As a result, uncertainties in Canadian fundamentals could lead to a disappointing GDP report, potentially dragging down the loonie
    Inflation within Canada has remained low in recent months, but is expected to gradually rise to the target level of 2 percent by mid-2015, when the economy is expected to return to full capacity. Although the Bank of Canada chose to hold its benchmark interest rate at 1.0 percent, the continual threat of record-rising household indebtedness could cause the central bank to hike interest rates in order to make borrowing more difficult and expensive. However, Governor Carney softened his tone on such a rate increase after growth unexpectedly stalled. The central bank cut its 2013 growth forecast to 1.5 percent from 2.0 percent. In addition, the IMF’s latest report suggested that Canada should refrain from tightening its monetary policy until its economy improves. In order to get a clue on the timing of interest rate move, investors will want to keep a close eye on three factors: economic growth, personal debt, and aspects of the housing market. With rates currently as low as they are, the Canadian dollar has less upward support.
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  8. #8
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    New Zealand Dollar to Hold Range Ahead of RBNZ



    Fundamental Forecast for New Zealand Dollar: Neutral

    • New Zealand Dollar Flat As Service Sector Remains Expansionary
    • Kiwi Surges As N.Z First Quarter CPI Rises Less-Than-Expected
    • Risk-On Sends Pound, Kiwi Higher on the Back of the Yen


    Weekly Outlook: 2014, February 02 - 09-new_zealand_dollar_to_hold_range_ahead_of_rbnz_body_picture_1.png



    The New Zealand Dollar ended the week nearly 2.0 percent lower, a dramatic turnaround from previous weeks. After disappointing Chinese data showed slower than expected growth in New Zealand’s biggest business partner, investors were forced to reconsider their positions in the kiwi. In addition, weak US data and a collapse in the prices of precious metals dragged down risk-linked currencies like the New Zealand Dollar. On the other hand, New Zealand’s first-quarter Consumer Price Index met economists’ forecasts and has grown at a steady pace. Looking forward, given this positive and negative momentum, we may see the kiwi rebound within range.

    The main event risk for the New Zealand Dollar next week comes in the form of the central bank rate decision scheduled for Tuesday. Currently, the country’s overall inflation pressures remain subdued, growing at a pace below the Reserve Bank‘s bottom target range for the third consecutive quarter. Recently, the currency’s high exchange rate has placed downward pressure on the price of traded goods such as imported household items.

    According to the RBNZ there are some growing concerns over the “current escalation of house prices”, which continue to climb, particularly in the country’s two largest cities, Auckland and Christchurch.

    However, the increase in rents and construction costs are not as significant as expected and there is little sign of a spillover in rebuild-related inflation in other regions of New Zealand outside of Canterbury. Domestic inflation is expected to rise gradually with the economic recovery, but is likely to remain in the bottom half of the central bank's target zone throughout the rest of this year. Consequently, the RBNZ’s inflationary concerns are minimal and the RBNZ may hold interest rates at record lows in order to boost jobs and help exporters who are hampered by a strong kiwi. On the Chinese data front, the April Manufacturing PMI and Business Sentiment Indicator reports will be the top drivers for the New Zealand Dollar.

    New Zealand’s small market size limits its global competitiveness and the nation’s economy has become closely correlated with that of China, similar in nature to the relationship between Canada and US. Despite China’s first-quarter GDP shortcomings, the nation’s recovery continues to be lead by improving domestic demand. As we discussed last week, signals continue to suggest that China is moving away from export-led growth to import-led growth. During this transition period, we may see some volatility and a subsequent economic slowdown in the short term. In the long term, however, China’s enormous population (1.3 billion) has the potential for significant consumption should individual savings be reduced from their current levels of 50% of income. This long term perspective adds positively to the outlook of New Zealand and its currency.

    The pace of the kiwi's weekly decline slowed following a Bloomberg News report concerning a G-20 draft statement, which affirmed a commitment, among the 20 nations, to avoid purposely weakening their currencies in order to gain a trade advantage. Previous gains in the Kiwi were largely driven by the increasing demand among investors who were looking for positive returns outside of Japan. As a result, traders should focus on the G-20 meeting over the weekend, as markets will look for any comments about Japanese currency intervention.
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  9. #9
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    Weekly outlook: February 3 - 7

    Weekly outlook: February 3 - 7




    The euro fell to 10-week lows against the dollar on Friday after data showing that the annual rate of euro zone inflation slowed in January rekindled fears that the European Central Bank would have to tighten monetary policy to avert the risk of deflation in the region.

    EUR/USD hit 1.3478, the weakest since November 22 and was last down 0.49% to 1.3488. For the week, the pair lost 1.35%.

    The annual rate of euro zone inflation slowed to 0.7% in January, Eurostat said, after a 0.8% gain in December. Analysts had expected the inflation rate to tick up to 0.9%.

    It was the fourth consecutive month the inflation rate came in at less than 1% and was well below the ECB’s target of 2%. The ECB unexpectedly cut rates to a record low 0.25% when inflation fell to a four-year low of 0.7% in October.

    The common currency fell to two-month lows against the yen, with EUR/JPY dropping 1.07% to 137.75, extending the weeks losses to 1.89%.

    The dollar was also lower against the yen as euro’s steep declines and a broad based selloff in emerging economies bolstered safe haven demand. USD/JPY ended Friday’s session down 0.69% at 101.99, and finished the week 0.63% lower.

    The Canadian dollar fell to a fresh four-and-a-half year lows against the U.S. dollar on Friday as the selloff in emerging markets prompted investors to stage a broad retreat from riskier assets.

    USD/CAD hit highs of 1.1224 before retracting some of those gains to settle at 1.1125. NZD/USD fell 0.97% to 0.8080 at the close of trade, while AUD/USD was down 0.50% to 0.8751.

    Emerging markets were hard hit by a combination of concerns over the impact of cuts to the Federal Reserve’s stimulus program and fears over a possible slowdown in China. The Turkish lira and the South African rand tumbled after surprise rate hikes did little to shore up the currencies.

    Emerging market economies are vulnerable to reductions in Fed stimulus, as they rely on foreign investment to plug their current account deficits.

    On Wednesday the Fed said it would scale back its monthly asset purchase program by another $10 billion to $65 billion, citing improvements in the labor market.

    Data released on Thursday showed that the U.S. economy grew 3.2% in the fourth quarter, in line with expectations.

    The dollar was higher against the pound and the Swiss franc on Friday. GBP/USD was down 0.29% to 1.6436 at the close and the pair lost 0.83% for the week. USD/CHF advance 0.39% to settle at 0.9064, extending the week’s gains to 1.12%.

    In the week ahead, investors will be keenly anticipating Friday’s U.S. nonfarm payrolls report for January after December’s report showed that the economy added far fewer jobs than expected.

    Interest rate decisions by the ECB, the Bank of England and the Reserve Bank of Australia will also be in focus.

    Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

    Monday, February 3

    Markets in China are to remain closed for the Lunar New Year holiday.

    Australia is to produce data on building approvals, a leading indicator of future construction activity.

    In the euro zone, Spain and Italy are to publish data on manufacturing activity. Elsewhere in Europe, Switzerland is to release its SVME manufacturing index.

    The U.K. is also to publish data on manufacturing activity, a leading indicator of economic health.

    Canada is to release data on raw materials price inflation.

    In the U.S., the Institute of Supply Management is to produce data on manufacturing activity, a leading economic indicator.

    Tuesday, February 4

    The RBA is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.

    Markets in China are to remain closed for the Lunar New Year holiday.

    In the euro zone, Spain is to release data on the change in the number of people unemployed.

    The U.K. is to publish data on construction sector activity, a leading economic indicator.

    The U.S. is to produce data on factory orders, a leading indicator of production.

    New Zealand is to publish data on the change in the number of people employed and the unemployment rate.

    Wednesday, February 5

    Markets in China are to remain closed for the Lunar New Year holiday. Japan is to publish data on average cash earnings.

    The euro zone is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. Spain and Italy are to publish data on service sector activity.

    The U.K. is also to release data on service sector activity, a leading economic indicator.

    Canada is to produce data on building permits.

    The U.S. is to release the ADP report on private sector job creation, which leads the government’s nonfarm payrolls report by two days. Meanwhile, the ISM is to publish a report service sector activity.

    Markets in New Zealand are to remain closed for a national holiday.

    Thursday, February 6

    Australia is to release data on retail sales and the trade balance, the difference in value between imports and exports. The nation is also to release private sector data on business confidence.

    Markets in China are to remain closed for the Lunar New Year holiday.

    Germany is to publish data on factory orders.

    The BoE is to announce its benchmark interest rate.

    Later in the day, the ECB is to announce its benchmark interest rate. The announcement is to be followed by a press conference with President Mario Draghi.

    Both the U.S. and Canada are to publish data on the trade balance, and the U.S. is also to publish the weekly report on initial jobless claims. Canada is to publish its Ivey PMI.

    Friday, February 7

    The RBA is to publish its monetary policy statement, which outlines economic conditions and the inflation outlook from the bank’s perspective.

    Germany is to publish reports on industrial production and the trade balance.

    Switzerland is to publish data on retail sales, while the Swiss National Bank is to release data on foreign currency reserves. This data is closely scrutinized for indications of the size of the bank’s operations in currency markets.

    The U.K. is to produce data on manufacturing and industrial production, as well as a report on the trade balance.

    Canada is to publish data on the change in the number of people employed and the unemployment rate.

    The U.S. is to round up the week with the closely watched government data on nonfarm payrolls and the unemployment rate.
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    USD/CHF weekly outlook: February 3 - 7

    USD/CHF weekly outlook: February 3 - 7




    The dollar was higher against the Swiss franc on Friday as data on personal spending and consumer sentiment added to the view that the U.S. economic recovery is deepening.

    USD/CHF hit highs of 0.9080, the strongest since January 23 and was last up 0.39% to 0.9062. For the week, the pair advanced 1.12%.

    The pair is likely to find support at 0.8960 and resistance at 0.9133, the high of January 23.

    Data released on Friday showed that U.S. consumer spending rose 0.4% in December, above expectations for an increase of 0.2%.

    A separate report showed that the University of Michiganís consumer sentiment index ticked down to 81.2 in January from 82.5 in December, but was better than the preliminary reading of 80.4 and forecasts for a reading of 81.0.

    The reports came one day after data showed that the U.S. economy grew 3.2% in the fourth quarter, in line with expectations.

    The data fuelled hopes that the recovery in the worldís largest economy could withstand reductions to the Federal Reserveís asset purchase program and turmoil in emerging markets.

    On Wednesday the Fed said it would scale back its monthly asset purchase program by another $10 billion to $65 billion, citing improvements in the labor market.

    Emerging markets have been hard hit by a combination of concerns over the impact of cuts to the Fedís stimulus program and fears over a possible slowdown in China. The Turkish lira and the South African rand tumbled after surprise rate hikes did little to shore up the currencies.

    In the week ahead, investors will be keenly anticipating Fridayís U.S. nonfarm payrolls report for January after Decemberís report showed that the economy added far fewer jobs than expected.

    Interest rate decisions by the European Central Bank, the Bank of England and the Reserve Bank of Australia will also be in focus.

    Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

    Monday, February 3

    Switzerland is to release its SVME manufacturing index.

    In the U.S., the Institute of Supply Management is to produce data on manufacturing activity, a leading economic indicator.

    Tuesday, February 4

    The U.S. is to produce data on factory orders, a leading indicator of production.

    Wednesday, February 5

    The U.S. is to release the ADP report on private sector job creation, which leads the governmentís nonfarm payrolls report by two days. Meanwhile, the ISM is to publish a report service sector activity.

    Thursday, February 6

    The U.S. is to publish the weekly report on initial jobless claims as well as data on the trade balance.

    Friday, February 7

    Switzerland is to publish data on retail sales, while the Swiss National Bank is to release data on foreign currency reserves. This data is closely scrutinized for indications of the size of the bankís operations in currency markets.

    The U.S. is to round up the week with the closely watched government data on nonfarm payrolls and the unemployment rate.
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