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Forex - Weekly outlook: January 2 - 6

Published 01/01/2017, 05:38 AM
Updated 01/01/2017, 03:38 PM
© Reuters.  Dollar declines as investors take profits after late year rally

Investing.com - The dollar declined against a basket of the other major currencies on Friday as traders took profits in the wake of a late year rally that propelled the greenback to 14-year highs.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.28% to 102.29 late Friday, off the 14-year high of 103.65 hit on December 20.

For the year, the index rose around 3.7% after rallying in the fourth quarter on the back of expectations for a faster pace of rate hikes from the Federal Reserve and increased fiscal spending under the incoming Trump administration.

The euro pushed higher in holiday thinned trade, with EUR/USD ending at 1.0517, up 0.29% for the day. The euro briefly jumped 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 third consecutive yearly decline.

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

Sterling fell around 16% against the dollar for the year amid concerns over the economic fallout from the June 23 vote to exit the European Union.

The dollar was higher against the yen, with USD/JPY up 0.34% at 116.95. On the year, the dollar posted its first yearly loss against the yen in five years, falling around 2.9%.

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

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

Market watchers will also be awaiting euro zone inflation data on survey data from the UK on manufacturing, service and construction sector activity.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, January 2

Financial markets around the world will be closed for the New Year holiday.

Tuesday, January 3

Financial markets in New Zealand and Japan will remain closed for holidays.

China is to publish its Caixin manufacturing PMI.

In the euro zone, Germany is to release preliminary inflation data and a report on the change in the number of people unemployed.

The U.K. is to release survey data on manufacturing activity.

The Institute for Supply Management is to release data on manufacturing activity.

Wednesday, January 4

The U.K. is to release survey data on construction activity.

The euro zone is to release preliminary data on inflation.

The Federal Reserve is to publish the minutes of its December meeting.

Thursday, January 5

China is to publish its Caixin services PMI.

The U.K. is to release survey data on service sector activity.

The U.S. is to release the ADP nonfarm payroll report and data on jobless claims. The ISM is to report on non-manufacturing activity.

Friday, January 6

Australia is to release trade data.

Germany is to report on factory orders and retail sales.

Canada is to publish its monthly jobs report along with trade data.

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

Latest comments

probably not a good time to trade eh?.
On the impact watch
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