U.S. Dollar Slips ahead of Bernanke Testimony- February 22-26

After another wild week and a very surprising rate hike, the last week of February also has its share of big events. Bernanke will continue to dominate the scene with two testimonies and revised GDP in the UK and the US will supply an exciting end to the week. And there are more market moving events. Here’s the weekly outlook.
Ben Bernanke stole the show with a surprising hike of the discount bank rate. This came after the close of the American stock markets but forex trading continues all the time – the dollar leaped. Some currencies took a bigger hit than others. This event will continue to dominate trading on Monday when there aren’t any major releases.

1.German Ifo Business Climate: Published on Tuesday at 9:00 GMT. This wide survey of 7,000 businesses has a strong impact on the Euro. Contrary to the ZEW report that is recently weak, this indicator has been rising steadily in the past year, edging up each time. From last month’s 95.8 score, it’s predicted to tick up to 96.3.

2.American CB Consumer Confidence: Published on Tuesday at 15:00 GMT. Consumer confidence impacts sales and the whole economy. In the past three months, this indicator rose from the low level it fell to, and also revisions to previous releases have been to the upside. This time, it’s predicted to drop from 55.9 to 55 points. This has a wide impact.

3.New Zealand Inflation Expectations: Published on Wednesday at 02:00 GMT. New Zealand has a high interest rate, but expectations for a rate hike like its neighbor Australia haven’t been met. A rate hike depends a lot on prices. This quarterly release will show the direction of inflation and a possible rate hike. Last quarter, expectations rose from 2.3% to 2.6%. Now they are predicted to edge up some more.

4.Ben Bernanke testifies: Happens during Wednesday at 15:00 GMT and Thursday at 14:00 GMT. After Bernanke’s shocking mini-rate hike that was made off the main hours, he’ll make his semi-annual report in broad daylight in front of two committees in Washington DC. Although he might use confusing language, his words will shake the markets.

5.American New Home Sales: Published on Wednesday at 15:00 GMT and overshadowed by Bernanke. New Home Sales took a big dive two months ago and showed everybody that the housing sector depends on government aid. It hasn’t returned to previous levels. From 342K, sales are predicted to edge up to 350K this time.

6.American Durable Goods Orders: Published on Thursday at 13:30 GMT. Orders have been revised to the upside in the past month, from 0.3% to 1%. Also Core orders have been revised to 1.4%. The positive trend is expected to continue, with a rise a rise of 1.6% in orders and 1.2% in core orders. This figure doesn’t touch the consumers, but has a long term impact on the economy.

7.American Unemployment Claims: Published on Thursday at 13:30 GMT and overshadowed by goods orders. The American job market is still fragile, and the number of claims refuses to leave the area it is in in the past months. Last week’s 473K is predicted to be followed by 466K this time. A number under 430K or above 480K will shake the markets.

8.British Revised GDP: Published on Friday at 9:30 GMT. Did Britain really return to growth? That’s a big question. The initial release for Q4 finally showed growth – but only 0.1%. Expectations are optimistic and a revision to 0.2% is expected. According to the unofficial NIESR GDP estimate, the economy did grow by only 0.1%. A drop to 0% growth or another quarter of contraction will be devastating for the Pound.

9.Swiss KOF Economic Barometer: Published on Friday at 10:30 GMT. This indicator, locally called Konjunkturbarometer, is an important composite index that usually reflects the situation of the Swiss economy quite well, and has a strong impact. From 1.77 points it’s predicted to rise to 1.77 points this time.

10.American Prelim GDP: Published on Friday at 13:30 GMT. The best is kept almost for last. There were many doubts about the rapid American growth that was reported in the first release. The second release is predicted to show only a small downward revision: from 5.7% to 5.6% in Q4 of 2010. The markets will surely shake with this release. A long term rise in the dollar’s value cannot happen without an improvement in jobs as well.

11.American Existing Home Sales: Published on Friday at 15:00 GMT. This release will be somewhat overshadowed by the GDP publication. Similar to new home sales, this figure, that accounts for more sales, is also volatile and is dependent on government aid. After a drop of 1 million sales last month, stability is expected this time – a tiny rise from 5.45 to 5.51 million.

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Greek Economy Spells Trouble For Eurozone – Market Weekly Outlook – February 15-19

A volatile week full with hope and fear comes to an end with currencies returning to the same spots. The week ahead contains a nice mix of events from all over the world: a rate decision in Japan, employment data from Britain, and lots of American numbers, with important inflation data to close the week. Here’s an outlook for the major events in the week ahead.

The Greek crisis is far from over. While Greece is only a small country at the edge of the Euro-zone, the implications of debt and the ways to deal with it have an impact on many other troubled countries in the region that is on the brink of new recession. This also has a wider impact – debt problems trigger risk aversion trading – dollar buying. OK, let’s start the review:

1.Japanese GDP: Published on Sunday at 23:50 GMT. As of Q2 of 2009, Japan is out of recession. The growth rate has dropped to 0.3% in Q3, after being first reported at 1.2%. Apart from slow economic growth, Japan historically suffers from deflation, a problem that won’t be solved soon. Growth of 1% is expected now.

2.British CPI: Published on Tuesday at 9:30 GMT. This important indicator has risen sharply in recent months. The last print was 2.9%, and the upcoming number is predicted to be 3.6%, above the government’s target. Mervyn King dismissed the inflation threats and signaled that no rate hike is underway. Will he continue this stance once again? Rising inflation isn’t seen elsewhere, and it will be interesting to see the impact on the whole market.

3.ZEW Economic Sentiment: Published on Tuesday at 10:00 GMT. This is a major market mover – especially the release for Germany.
In the past months, it has deteriorated sharply, going hand by hand with the Eurozone’s troubles, and Germany’s stagnant economy. It’s expected to dive again – this time from 47.2 to 41.9 points.

4.American TIC Long-Term Purchases: Published on Tuesday at 14:00 GMT. Foreign investment in the US has made a leap last month, rising from 20 to 126 billion dollars. This confidence in the US economy and the dollar probably won’t repeat itself, at least not so strong – 50 billion is predicted this time. A stronger number will boost the dollar.

5.British Employment Data: Published on Wednesday at 9:30 GMT. The number of unemployed people made a turnaround in Britain two months ago and the positive trend continued last month as well. The Claimant Count Change, an early an important indicator is expected to show another “positive loss” of unemployed people this month – 14.3K. The British Unemployment Rate is predicted to remain stable at 7.8%, but economists were wrong with this figure over and over again. Positive numbers will also push towards a rate hike.

6.American Building Permits: Published on Wednesday at 13:30 GMT. The housing sector was one of the main contributors to the downturn in the economy, and is recovering slowly. The annualized number of 0.65 million is predicted to be followed by a drop to 0.62 million. The economy cannot make a significant advance without a healthy housing sector. Also note the housing starts published at the same time.

7.FOMC Meeting Minutes: Published on Wednesday at 19:00 GMT. Although the wording of the statement hasn’t changed, there was one surprise in the recent American rate decision – one member voted to change the wording and start signaling a future rate hike. When the minutes will be revealed, we’ll get to see if other members also began thinking out loud about such an option.

8.Japanese Rate Decision: Published on Thursday, in the early hours. No rate hike is expected in Japan, which suffers from deflation. The Overnight Call Rate is predicted to remain unchanged at 0.1% but the views that that will be expressed about the economy by the BOJ usually move the Yen.

9,American PPI: Published on Thursday at 13:30 GMT. Producer prices aren’t always a market mover, but this time, a rise of 0.8% is predicted, much higher than last month’s 0.2% rise and much higher than previous months. Such a rise might cause Bernanke to rethink the “extended period” wording in the FOMC Statements.

10.American Unemployment Claims: Published on Thursday at 13:30 GMT. After a surprise last week – a drop to 440K, the drop in jobs seen in the NFP can be forgotten. A small rise to 445K is predicted this time. Only another drop, preferably below 430K can boost the dollar.

11.American Philly Fed Manufacturing Index: Published on Thursday at 15:00 GMT. This important gauge has seen 6 months of improving conditions, but last month was disappointing with a drop to 15.2 points. A steady rise to 17.2 is predicted this time.

12.American CPI: Published on Friday at 13:30 GMT. The major inflation figure closes the week. Contrary to the expectations from the PPI, consumers probably didn’t see a significant rise in prices. CPI is predicted to rise by 0.3% and Core CPI, an indicator that the Federal Reserve watches, is expected to rise by 0.2% – very stable. A jump will make the markets jump, seeing another crazy Friday. For USD/CAD traders, note that the Canadian CPI is published around the same time.

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TradeSmarter.com Market Weekly Outlook – February 8-12

After one of the wildest weeks that we’ve seen in quite a while, the upcoming week seems more quiet, at least at the beginning. The echoes of the Non-Farm Payrolls will be heard during this time. Later on, some major market moving events are due. Here’s the outlook for the second week of February.

Finance ministers of the G7 nations are meeting in the remote Canadian town of Iqaluit and may release important comments that might impact the opening of the markets. The final remarks by US Treasury Secretary Timothy Geithner are of high importance. He’ll speak more than 24 hours before the markets open, so there will be enough time to digest his words. Let’s review the week’s events:

1. Swiss Retail Sales: Published on Monday at 8:15 GMT. Switzerland enjoys good fundamentals but the central bank doesn’t like it at all. The SNB intervenes in the markets, but usually this doesn’t have a long lasting effect. This important figure is expected to rise by an annual rate of 1.6%, double of last month’s number. There will action in USD/CHF around this release.
   

2. British Inflation Report: Published on Wednesday at 10:30 GMT. This important quarterly event will address the rising inflation in Britain and the central bank’s measures against it. This report, accompanied by a press conference by Mervyn King goes beyond inflation and will deal with the whole economy, which is shaky.
3. US and Canadian Trade Balance: Published together on Wednesday at 13:30 GMT. This double-feature event always shakes USD/CAD. The American deficit is predicted to squeeze from 36.4 billion to 35.5 billion, while the Canadian trade balance is almost balanced. It’s predicted to stand at 0.1 billion, and could also turn into a surplus.
   
4. British NIESR GDP Estimate: Published on Wednesday at 15:00 GMT. After the disappointing official Q4 GDP, we’ll get an initial unofficial glimpse at the British economy in 2010. Last month’s release related to the whole of Q4, and showed a higher number than the official release, but lower than economists’ estimates. The Pound will need a more serious growth to rise.
   
5. Ben Bernanke testifies: On Wednesday. Exact time currently unknown. The head of the Federal Reserve will lay out the plans for exiting the crisis, and the emergency measures. During this testimony, he’ll probably provide an updated overview of the American economy.
   
6. Australian employment figures: Published on Thursday at 00:30 GMT. Australia enjoys a healthy job market, and it’s predicted to remain rather steady. Australian unemployment rate is predicted to edge up to 5.6% from 5.5% but the employment change is expected o be positive again, showing a rise of 15,000 jobs. This is less than last month’s nice 35,000 job gain.
   
7. American Retail Sales: Published on Thursday at 13:30 GMT. Both retail sales and core retails sales disappointed last month with drop of 0.3% and 0.2%. These important consumer-related figures are expected to rise this time by 0.3% each. This release, together with jobless claims, will shake the markets.
   
8. American Unemployment Claims: Published on Thursday at 13:30 GMT. This important weekly figure disappoints every week with a number that is higher than expectations. After reaching 480K, economists expect a drop to 455K. This will be the first job figure after the Non-Farm Payrolls.
   
9. New Zealand Retail Sales: Published on Thursday at 21:45 GMT. Although more people are unemployed in New Zealand, the consumers continue buying. Both retail and core retail sales have risen by 0.8% last month, and this trend is expected to continue, helping the beaten kiwi dollar.
10. German GDP: Published on Friday at 7:00 GMT. Europe’s largest economy is the first to release GDP data for Q4. This initial release is expected to show a modest growth rate of 0.3%, much less than 0.7% that was reported in Q3. Germany led the continent with nice growth already in Q2. Now it might lag behind.
    
11. European Flash GDP: Published on Friday at 10:00 GMT. 3 hours after the German release, the figure for the whole continent is due. This is expected to be better than the German one, and show a growth rate of 0.4%. This European morning will be very volatile for EUR/USD. Note that French and Italian numbers are also released during this time, something that might add confusion.
12. American Consumer Sentiment: Published on Friday at 14:55 GMT. The week ends with a strong note – the University of Michigan provides its preliminary consumer sentiment figure, which is doing quite well. After reaching 74.4, it’s predicted to edge up to 75.2 points. This will shake the markets before the weekly close.

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