December 26 – 30 Forex Weekly Outlook

On Friday, the U.S. dollar inched a little lower compared to a basket of currencies in pre-holiday trade, falling from its 14-year-peak as investors took profits in the run-up to the Christmas weekend.

The U.S.dollar index, which gauges  the greenback’s strong point against a trade-weighted basket of six major currencies, plunged 0.1% to 103.00 by late Friday. On Tuesday, the index increased to 103.62, the strongest level since December 2002.

During the week, the index gained lower  than 0.1% in thinning trading ahead of the year-end holiday period.

The dollar stayed well-supported thanks to bets of higher U.S. development and a quicker pace of interest rate surged under incoming president Donald Trump.

The Fed Reserve hiked interest rates for the 1st time in a year earlier this month and expected three more increases in 2017.

Higher rates increase the dollar by making the currency more attractive to yield-seeking investors.

Compared to the yen, the greenback decline to 117.34 on Friday, retreating from a 10-1/2 month peak of 118.65 set  the previous  week. The pair lost 0.5% on the week, snapping a six-week win streak.

Temporarily, the euro tacked on 0.2% to end at 1.0456 by late Friday, recovering from 1.0352 on Tuesday, the lowest since January 2003.

Somewhere else, the British pound declined  to a seven-week low of 1.2229, pressured by renewed improbability over the process by which Britain will exit the European Union.

In the week onward, trading volumes are projected to stay light because of the Christmas holiday and as many traders already closed books before the  year end, decreasing liquidity in the market and increasing the volatility.

The U.S. is to release reports on consumer confidence, pending home sales, and jobless privileges, as traders look for additional signal on the strength of the economy and indications on the future path of monetary policy.

Somewhere else, Japanese inflation statistics will also be in emphasis as investors weigh the need for additional stimulus in the world’s 3rd largest economy.

On Additional  News

On December 26, the Bank of Japan will announce minutes of its latest policy meeting.

To make up for Christmas Day falls on a Sunday, stock markets in Australia, New Zealand, Europe, the U.K., Switzerland, Canada and the U.S. will stay closed.

All floor trading for precious and base metals choices  will be close for the Christmas holiday.

On December 27, Japan is to release data on inflation, employment and household expenditure.

Markets in the U.K. and Canada will stay closed for Boxing Day. The U.S. is to release private sector data on consumer confidence.

On Wednesday, December 28, Japan is to produce statistic on industrial output and retail sales. The U.K. is to release industry data on mortgage approvals.  The U.S. is to publish data on pending home sales.

On Thursday, December 29, the U.K. is to post industry data on housing costs.

The euro zone is to release a report on the money supply development and private loans. The U.S. is to create data on weekly jobless claims, wholesale inventories and the trade deficit.

On December 30, in the euro zone, Spain will post monthly inflation statistics.

The U.S. is to recap the week, with data on manufacturing activity in the Chicago-region.

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