Next Week’s FX Forecast & Events Dec 02, 2019

Trade developments still extremely important

US-China trade developments will continue to be watched closely during the week ahead. The issue will also become more pressing with the increase in tariffs on Chinese goods due to come into effect on December 15th

Risk appetite will hold firm if there is positive rhetoric, but an actual agreement will be needed to trigger sharp gains in equity markets and heavy yen selling.

In contrast, a breakdown in talks would trigger sharp declines in equities together with strong gains for the Japanese and Swiss currencies. 

US

The latest ISM business confidence survey, scheduled for release on Monday, will be important for market sentiment. There have been a series of weak readings, but a rival survey suggested a significant recovery for November. Confidence in the US outlook will improve if there is a recovery back into expansion territory for the ISM index. The non-manufacturing data is due on Wednesday.

Comments from Federal Reserve officials are unlikely to have a significant market impact unless the data releases are much weaker than expected.

The Congressional enquiry on whether to impeach President Trump will continue during the week.

UK

The PMI business confidence indices will be released for November. The overall impact is likely to be limited as flash reading for these reports have already been released.

Political developments will be monitored closely with the General Election campaign still in full force. In simplistic terms, evidence of the Conservatives losing support would tend to undermine Sterling while evidence of a widening lead would tend to boost the UK currency.

Euro-zone

The German industrial orders and production data will be watched closely on Thursday and Friday for any evidence of an upturn in the manufacturing sector.

ECB comments will be monitored closely with bank President Lagarde due to testify before the European Parliament on Monday.  

International

The Reserve Bank of Australia will announce its latest interest rate decision with rates expected to be held at 0.75%. The latest GDP data is due on Wednesday.

The Bank of Canada will announce its interest rate decision on Wednesday with rates also expected to remain on hold at 1.75%.

Canadian employment data is due on Friday following the weaker than expected release last month.

There will be further Chinese PMI business confidence releases during the week with Caixin PMI manufacturing data scheduled on Monday.

OPEC will hold its latest 6-monthly ministerial meetings and changes in oil prices will have an impact on the Canadian dollar.

 

Currency FX Forecast for Next Week

Currency pair Spot  1-week forecast 1-month forecast
EUR/USD 1.102 1.105 1.113
USD/JPY 109.3 109.9 108.6
EUR/GBP 0.854 0.857 0.835
GBP/EUR 1.171 1.167 1.198
GBP/USD 1.290 1.289 1.333
AUD/USD 0.677 0.680 0.692
USD/CAD 1.328 1.325 1.318
USD/SGD 1.367 1.365 1.359
USD/HKD 7.826 7.835 7.840
NZD/USD 0.643 0.645 0.650
GBP/JPY 141.3 141.7 144.7
GBP/AUD 1.906 1.896 1.926
GBP/NZD 2.007 1.999 2.051
GBP/SGD 1.764 1.760 1.811
GBP/HKD 10.10 10.10 10.45
GBP/CHF 1.290 1.289 1.329

 

Tim Clayton

Tim Clayton is a market analyst with more than 20 years of experience in the financial markets, with particular focus on currencies. Holds an economics degree from University of New York. Writes for multiple publications including Investing.com and SeekingAlpha so he is on top of all the happening in the world of currencies and macro-economics.

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