December 5 to 9 Forex Weekly Outlook

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On Friday, the greenback fell against a basket of the  major currencies after statistic indicated that while U.S economy put additional jobs than announced last month wage progress dropped.

The U.S. dollar index, which gauges the greenback’s strong point against a trade-weighted basket of six major currencies, decline 0.27% to 100.75 on late Friday.

The index declined 0.68% for the week, its first weekly drop in four weeks.

The Labor Department stated the U.S. economy added 178,000 jobs in November from the previous month, while the job loss rate declined to 4.6%, its lowest level in nine years.

Economists had predicted nonfarm payrolls increasing by 175,000 the previous month and the unemployment rate remaining unmoved at 4.9%.

However, the report also presented that average hourly earnings  drop 0.1% from October, although the yearly rate of wage progress reduced to 2.5% from 2.8% in October.

The report highlighted the Federal Reserve’s case for increasing U.S. interest rates at its upcoming meeting on December 13-14, but the sluggish wage data troubled the outlook for additional rate hikes in the year 2017.

According to the report, investors are currently pricing in a 100% possibility of a rate hike this December.

Investors see a 93.9% possibility that the Fed follows a December rate increase by tightening policy at its upcoming  meeting in February.

Expectations of higher rates tend to increase the greenback, as increasing borrowing costs make the currency more attractive to yield seeking investors.

The dollar destabilized against the yen, with USD/JPY decline to 0.52% at 113.51, paring the week’s increase to 0.77%.

The euro was flat, with EUR/USD at 1.0663 late Friday.

The single currency stayed under pressure during concerns over the health of Italy’s banking system  before Sunday’s constitutional referendum which could see the government resign.

A Sterling increase over 1% compared to the dollar and the euro, building on the prior session’s strong gains as worries over the prospects of a ‘hard-Brexit’ eased.

GBP/USD increased 1.02% at 1.2720 late Friday, while EUR/GBP declined  1.02% to 0.8381.

In the week onward, investors will be carefully observing the outcome of Italy’s referendum vote, which could further weaken the euro area.

Market observers will also be focusing their attention to Thursday’s European Central Bank meeting and anticipating U.S. data on non-manufacturing activity and consumer confidence going into the holiday period.

On Additional New

On  December 5, the U.K. is to release data on service sector activity. The Institute for Supply Management is to release its non-manufacturing PMI.

On December 6, the Reserve Bank of Australia is to declare its benchmark interest rate and release a policy statement which plans economic conditions and the factors affecting the monetary policy decision.

The U.S. is also to publish trade data, together with reports on nonfarm productivity and factory orders.

On December 7, Australia is to release data on 3rd quarter economic development.

The U.K. is to publish industry data on house price inflation, along with official figures on manufacturing and industrial production.

The Bank of Canada is to broadcast its benchmark interest rate and release its current policy statement.

On December 8, both China and Australia are to release trade data.

The European Central Bank is to broadcast its current monetary policy decision. The declaration is to be followed by a press conference with President Mario Draghi.

On this date, Canada is also to produce reports building permits and new house price inflation.

The U.S. is to announce the weekly report on unemployed claims.

December 9, China is to release data on consumer and producer price inflation. The U.S. is to round up the week with an initial reading on consumer sentiment for December from the University of Michigan.

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