Weekly FX Market Recap: Week Of January 4th - 8th

Key Fundamental Forex Events for the Week of January 4th through January 8th
The following table lists the key economic data and other events that came out during the week of January 4th through January 8th, with release times displayed for the GMT time zone.

The list also indicates how much each release deviated from the market consensus forecast upon release, as well as what the affected major currency pair or pairs did after each event or set of events.

Sunday, January 3rd
6:15pm USD FOMC Member Fischer said that,

“Could negative interest rates be a policy response that the Federal Reserve could choose to employ in a future crisis? One possible concern with a strategy of this sort in the United States is the potential for destabilizing effects in money markets. For example, various observers have noted that negative rates could lead to scenarios in which money funds "break the buck" or simply shut down, either of which could generate strains in money markets. Another concern is whether the complex and interconnected infrastructure supporting securities transactions in the U.S. financial system could readily adapt to a world of negative interest rates.”

The currency rose.

All Day NZD Bank Holiday

10:30pm USD FOMC Member Mester said that,

“In summary, the economy has made substantial progress toward the Fed’s goals of maximum employment and price stability – enough progress that in December the FOMC moved its target federal funds rate up by 25 basis points from essentially zero, where it had stood for 7 years. Even with this increase, monetary policy is expected to remain accommodative for some time to come and will continue to support the expansion. I believe this first step on a gradual path toward more normal policy should be viewed as welcome news. It is an indication of monetary policymakers’ confidence that the economic progress we have seen in recent years will continue.”

The currency rose.

Monday, January 4th
1:45am CNY Caixin Manufacturing PMI 48.2 versus 48.9 expected.
All Day EUR German Preliminary CPI -0.1% versus 0.2% expected. The currency fell.
8:15am EUR Spanish Manufacturing PMI 53.0 versus 53.1 expected. The currency fell.
9:30am GBP Manufacturing PMI 51.9 versus 52.8 expected. The currency fell.
9:30am GBP Net Lending to Individuals 5.3B versus 4.9B expected. The currency fell.
3:00pm USD ISM Manufacturing PMI 48.2 versus 49.1 expected. The currency rose.

Tuesday, January 5th
8:00am EUR Spanish Unemployment Change -55.8K versus -52.6K expected. The currency fell.
8:55am EUR German Unemployment Change -14K versus -7K expected. The currency fell.
9:30am GBP Construction PMI 57.8 versus 56.1 expected. The currency fell.
10:00am EUR CPI Flash Estimate 0.2% versus 0.4% expected. The currency fell.
10:00am EUR Core CPI Flash Estimate 0.9% versus 1.0% expected. The currency fell.
1:30pm CAD RMPI -4.0% versus -2.3% expected. The currency rose.
2:07pm NZD GDT Price Index -1.6% versus last 1.9%. The currency fell.

Wednesday, January 6th
1:45am CNY Caixin Services PMI 50.2 versus 52.3 expected.
All Day EUR Italian Bank Holiday
9:30am GBP Services PMI 55.5 versus 55.6 expected. The currency fell.
1:15pm USD ADP Non-Farm Payrolls 257K versus 193K expected. The currency rose.
1:30pm CAD Trade Balance -2.0B versus -2.6B expected. The currency rose.
1:30pm USD Trade Balance -42.4B versus -44.0B expected. The currency fell.
3:00pm USD ISM Non-Manufacturing PMI 55.3 versus 56.0 expected. The currency fell.
3:00pm USD Factory Orders -0.2% versus -0.2% expected. The currency fell.
3:30pm USD Crude Oil Inventories -5.1M versus 0.7M expected. The currency fell.
7:00pm USD FOMC Meeting Minutes noted that,

“The Committee judges that there has been considerable improvement in labor market conditions this year, and it is reasonably confident that inflation will rise, over the medium term, to its 2 percent objective. Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent. The stance of monetary policy remains accommodative after this increase, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.”

The currency fell.

Thursday, January 7th
12:30am AUD Building Approvals -12.7% versus -2.8% expected. The currency fell.
12:30am AUD Trade Balance -2.91B versus -2.98B expected. The currency fell.
7:00am EUR German Factory Orders 1.5% versus 0.1% expected. The currency rose.
7:00am EUR German Retail Sales 0.2% versus 0.5% expected. The currency rose.
8:00am CHF Foreign Currency Reserves 560B versus last 563B. The currency fell.
8:00am GBP Halifax HPI 1.7% versus 0.5% expected. The currency fell.
10:00am EUR Unemployment Rate 10.5% versus 10.7% expected. The currency rose.
1:25pm CAD BOC Governor Poloz said that,

“Back in 2002, when oil prices were around US$25 per barrel, investment in the oil and gas sector represented about 17 per cent of total business investment here in Canada. By 2014, that figure had jumped to 30 per cent. The share of oil and gas in Canada’s merchandise exports almost tripled over that same period. This rise in the importance of our energy sector was a natural response to higher prices for oil—because the world was offering more for each barrel, we invested more in our capacity, and more Canadians moved to work in the oil patch. This is also why the impact of the sudden drop in oil prices has been so large.”

The currency rose.
1:30pm USD Weekly Initial Jobless Claims 277K versus 271K expected. The currency fell.
3:00pm CAD Ivey PMI 49.9 versus 56.7 expected. The currency rose.

Friday, January 8th
12:30am AUD Retail Sales 0.4% versus 0.4% expected. The currency rose.
9:30am GBP Trade Balance -10.6B versus -10.5B expected. The currency fell.
1:30pm CAD Employment Change 10.4K versus last -35.7K. The currency fell.
1:30pm CAD Unemployment Rate 7.1% versus last 7.1%. The currency fell.
1:30pm CAD Building Permits -3.2% versus last 9.1%. The currency fell.
1:30pm USD Average Hourly Earnings 0.2% versus last 0.2%. The currency rose.
1:30pm USD Non-Farm Payrolls 203K versus last 211K. The currency rose.
1:30pm USD Unemployment Rate 5.0% versus last 5.0%. The currency rose.

Saturday, January 9th
1:30am CNY CPI 1.7% versus last 1.5%.
1:30am CNY PPI -5.8% versus last -5.9%.

Technical Recap for the Majors This Week

EUR/USD:
Forecast: Lower
Actual: Mildly higher from a 1.08659 open to a 1.09018 close.

USD/JPY:
Forecast: Higher
Actual: Lower from a 120.174 open to 117.797 close.

GBP/USD:
Forecast: Lower
Actual: Lower from a 1.47283 open to a 1.45711 close.

AUD/USD:
Forecast: Lower
Actual: Lower from a 0.72805 open to 0.69729 close.

USD/CAD:
Forecast: Mildly Higher
Actual: Higher from a 1.38129 open to a 1.41256 close.

NZD/USD:
Forecast: Mildly Higher
Actual: Lower from a 0.68256 open to a 0.65421 close.

Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.