Forex – Weekly Outlook: January 8 – 12
Investing.com – The dollar ended slightly higher against a basket of the other major currencies on Friday after briefly dipping following a weaker-than-expected U.S. nonfarm payrolls report for December.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.16% at 91.75 late Friday.
Employment data for October and November data were revised to show 9,000 fewer jobs created than previously reported.
Earnings rose by an annualized 2.5% in December, as expected, but November’s wage growth was revised down to 2.4% from 2.5%.
The dollar briefly slid to the day’s lows following the report before regaining ground.
While the report was disappointing given the miss in jobs growth the rise in wage growth was a bright spot.
The jobs data was seen as unlikely to alter investor expectations for a rate hike by the Federal Reserve at its March meeting.
Fed officials have penciled in three rate increases this year and two in 2019. Higher interest rates tend to boost the dollar by making the currency more attractive to yield-seeking investors.
Fed funds futures have priced in a more than 67% chance the U.S. central bank will hike interest rates in March, according to Investing.com’s Fed Rate Monitor tool.
Another report showing that U.S. service sector activity cooled slightly in December had little impact on the dollar.
The dollar was higher against the yen late Friday, with USD/JPY rising 0.27% to 113.05.
The euro was lower against the greenback, with EUR/USD sliding 0.31% to 1.2029.
Sterling was slightly higher against the dollar, with GBP/USD rising 0.18% to 1.3573 as investors awaited further new developments on Brexit.
The dollar had fallen earlier in the week as expectations for faster monetary tightening outside the U.S., which would lessen the divergence between the Fed and other central banks, weighed.
In the week ahead, investors will be turning their attention to U.S. inflation data and comments by a number of Fed speakers for further clues on the timing of the next rate hike.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 8
Financial markets in Japan will remain closed for a holiday.
The UK is to release an industry report on house price inflation.
The Bank of Canada is to publish its quarterly business outlook survey.
Meanwhile Atlanta Federal head Raphael Bostic and San Francisco Fed head John Williams are both due to deliver remarks.
Tuesday, January 9
Australia is to publish data on building approvals.
Germany is to report on industrial production and the trade balance.
The euro zone is to report on the unemployment rate.
Wednesday, January 10
China is to release data on producer and consumer price inflation.
The UK is to report on manufacturing production and the trade balance.
Canada is to publish figures on building permits.
The U.S. is to report on import prices.
Thursday, January 11
Australia is to produce data on retail sales.
The European Central Bank is to publish the minutes of its December policy meeting.
Canada is to release data on new house price inflation.
The U.S. is to publish data on producer price inflation and initial jobless claims.
Outgoing New York Fed President Bill Dudley is to deliver remarks at an event in New York.
Friday, January 12
China is to report on the trade balance.
The U.S. is to round up the week with what will be closely watched data on consumer inflation and retail sales.