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Weekly Preview: 5 Currencies to Keep an Eye on for the Week Ahead (Jan 13 - Jan 17)

Market Analysis - | 13 Jan 2020

  • USD: NFP showed mixed picture, CPI and core retail sales in focus this week
  • GBP: BOE’s dovish stance could see the Pound edge lower
  • JPY: Market regaining risk appetite as Iran tensions ease
  • EUR: Trade balance, Industrial Production, CPI and Germany's Real GDP growth data in focus
  • AUD: Risk off climate to persist. Investors to watch for key economic data coming out of Chinese markets.

CURRENCY: USD

USD has been buoyed by its good labour data at the beginning of last week. This week the labour Department figures showed that jobless claims fell by more than economists forecast to a five-week low.  This is in line with the ADP job report that showed U.S. firms in December added the most jobs in eight months. However,the nonfarm payroll report on Friday showed that payroll gains cooled by more than forecast and wages rose at the weakest annual pace since 2018. The mixed picture from NFP is likely to hinder USD rebound and market is watching for more data for the next step.This week we will have the release of CPI and retail sales growth, if these data prints to the upside, USD may continue its strength against other major currencies.

DXY Chart, Source: TradingView.com
DXY Chart, Source: TradingView.com

CURRENCY: GBP

Last week, Boris Johnson has finally succeeded in getting the Brexit legislation through the House of Commons. With the UK now having one foot out of the EU door, we could be seeing more stability in the currency. Looking ahead, the upside of the currency might be limited as BOE’s Carney takes a dovish stance with the market pricing in chances of further rate cuts ahead. On the data front, investors will be keeping a close watch on the Industrial Production, Trade Balance, Manufacturing Production, GDP, CPI, PPI and retail sales data where missing estimates could see the currency edge lower.

GBPUSD Chart, Source: TradingView.com
GBPUSD Chart, Source: TradingView.com

CURRENCY: JPY

JPY has been on a roller coaster ride this week with tensions in Iran heightened before it finally eased. Speculative interest rushed to the safe haven following news that the U.S. killed a top Iranian Commander. However, President Trump backed away from further military action against Iran and called for renewed diplomacy on Wednesday, helping the market regaining risk appetite. The currency is near its five-month low amid the report that Ukrainian jet that fell in Iran was shot down by a missile. The JPY could rise again if geopolitical tensions heighten again. Moving forward, investors should also look out for Core Machinery orders and PPI coming out next week.

USDJPY Chart, Source: TradingView.com
USDJPY Chart, Source: TradingView.com

 

CURRENCY: EUR

Last week, EUR tumbled lower as the recent Germany's data fell short expectations, alongside a risk off market sentiment as geopolitical tensions escalate between Iran and the US on the killing of Iran's top military general. Looking ahead, on the data front, investors will be keeping a close watch on the Trade balance, Industrial Production, CPI and Germany's Real GDP growth data which could provide a clearer direction for the currency. Besides, the market will be shifting its focus to the signing of the Phase one trade deal between the US and China on 15 January where the EUR could benefit from the improved market risk sentiment.

EURUSD Chart, Source: TradingView.com
EURUSD Chart, Source: TradingView.com

 

CURRENCY: AUD

AUD strengthened at the start of the Asian trading session, opening the new week as the best performing currency and paring its losses from last week. This was in part due to a mixed and less than satisfactory US NFP result last friday. Despite better than expected economic data being released last week, the risk-off sentiments took over the global markets this week which caused the AUD to drop last week. This week would be a heavy week for AUD due to multiple Chinese data being released such as China’s GDP, Industrial production, trade balance and NBS press conference. Investors would have to navigate next week carefully watching development over Chinese economic data and US-Iran tensions going into this week.

AUDUSD Chart, Source: TradingView.com
AUDUSD Chart, Source: TradingView.com

 

Read more market views from the AxiTrader team: https://www.axitrader.com/au/market-news-blog/.

The information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.

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