Next Week’s FX Forecast & Events Dec 16, 2019

Trade talks face key deadline

US-China trade developments will continue to be monitored as there are still some details to be finalised on the phase-one trade deal. As long as there is no immediate collapse in the deal, demand for defensive assets is likely to be relatively limited. 

The US may releases its latest currency report during the week. If so, markets will be watching whether China is again called a currency manipulator. Any removal of China from the list would improve global risk appetite.

US

The latest business confidence data is due on Monday with the manufacturing release particularly important given mixed data last month. 

Political developments will be monitored closely with the House of Representatives likely to hold a full vote on whether to formally impeach President Trump.

UK

The latest business confidence data will be released on Monday. The overall impact will tend to be relatively subdued given that all the data will have been received before the General Election and the election is likely to have a notable impact on sentiment. 

Monthly jobs and wages data is due on Tuesday with the inflation release on Wednesday followed by retail sales on Thursday. 

The Bank of England will announce its latest interest rate decision on Thursday. Markets will be assuming that the committee will be much less likely to cut interest rates now there has been a decisive election outcome. The statement will be watched very closely to assess whether there has been a shift instance within the committee following the election, especially as two members voted for a rate cut at the previous meeting.

The Bank of England itself will also be a focus with the next Governor likely to be announced during the week. 

Political developments will continue to be significant with the Brexit Withdrawal Deal due to be brought back to the House of Commons by the end of the week. Overall, however, politically-influenced volatility should decline sharply.

Euro-zone

The latest Euro-zone PMI business confidence data will be released on Monday. This will be an important set of data given tentative evidence of a limited Euro-zone recovery. A significant improvement in the PMI data would boost confidence in firmer conditions and support the Euro.  

The German IFO business confidence survey is due on Wednesday.

International

The Bank of Japan will announce its latest policy decision on Thursday with no change in policy expected, although the rhetoric watched closely. 

The Australian labour-market report is also due on Thursday while Canadian inflation data is due on Wednesday.

New Zealand business confidence data is due on Tuesday local time followed by GDP data on Thursday.

Currency FX Forecast for Next Week

Currency pair Spot  1-week forecast 1-month forecast
EUR/USD 1.113 1.120 1.118
USD/JPY 109.4 109.7 108.5
EUR/GBP 0.834 0.825 0.816
GBP/EUR 1.199 1.212 1.225
GBP/USD 1.335 1.358 1.370
AUD/USD 0.689 0.695 0.698
USD/CAD 1.318 1.315 1.310
USD/SGD 1.354 1.352 1.350
USD/HKD 7.800 7.800 7.820
NZD/USD 0.660 0.667 0.673
GBP/JPY 145.9 148.9 148.6
GBP/AUD 1.938 1.953 1.963
GBP/NZD 2.024 2.035 2.036
GBP/SGD 1.807 1.835 1.850
GBP/HKD 10.41 10.59 10.71
GBP/CHF 1.313 1.337 1.360

 

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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