January 2 – 6 Forex Weekly Outlook

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On Friday, the greenback dropped against a basket of the other major currencies as traders gain profits in the wake of a late year rally that propelled the dollar to 14-year peaks.

The U.S. dollar index, which gauges the greenback’s strong point against a trade-weighted basket of six major currencies, declined 0.28% to 102.29 late Friday, off the 14-year peak  of 103.65 hit on December 20.

For the year, the index increased approximately 3.7% after rallying in the 4th quarter on the back of anticipations for a quicker pace of rate hikes from the Fed Reserve and surged fiscal spending under the incoming Trump administration.

The euro pressed higher in holiday thinned trade, with EUR/USD  ending at 1.0517, increase 0.29% for the day. The euro temporarily hopped as high as 1.0653 during Asian trade, the strongest level in two weeks, before retracing gains.

The single currency ended the year down 3% against the dollar, its 3rd consecutive yearly dropped.

The pound was also higher, with GBP/USD is advancing 0.71% to 1.2350 in late trade.

Sterling declined approximately 16% against the greenback  for the year during concerns over the economic fallout from the June 23 vote to leave the European Union.

The greenback was higher compared to the yen, with USD/JPY increased 0.34% at 116.95. On the year, the greenback posted its first yearly loss against the yen in five years, declining approximately 2.9%.

In the week onward, investors will be looking forward  to Friday’s U.S. employment report for December together with Wednesday’s minutes of the Fed’s December meeting.

U.S. data on manufacturing and service sector activity will also be in emphasis.

Market observers will also be in anticipation of euro zone inflation data on survey data from the UK on manufacturing, service and construction sector activity.

On Additional  News

On January 2, financial markets around the globe will be closed for the New Year holiday.

On January 3, financial markets in New Zealand and Japan will stay closed for holidays.

China is to post,it’s Caixin manufacturing PMI. In the euro zone, Germany is to release preliminary inflation statistic and a report on the adjustment in the figure of people unemployed.

The U.K. is to release survey statistic on manufacturing activity.  The Institute for Supply Management is to publish data on manufacturing activity.

On January 4, the U.K. is to publish survey data on construction activity.  The euro zone is to post preliminary data on inflation.

The Fed Reserve is to post, it’s December minutes of the meeting.

On January 5, China is to post, it’s Caixin services PMI. The U.K. is to publish survey data on service sector activity.

The U.S. is to publish the ADP nonfarm payroll report and statistic on unemployed privileges. The ISM is to report on non-manufacturing activity.

On January 6, Australia is to publish trade data. Germany is to report on factory orders and retail sales.

Canada is to post its monthly jobs report together with trade data.

The U.S. is to round up the week with the closely observed report on nonfarm payrolls along with data on trade and factory orders.

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