Major market moving events for 52nd week of 2015

Author Haresh Menghani Category Fundamental Analysis 21 Dec 2015 Updated at 11:43 CET
Reflecting its faith on the domestic economy, the Federal Reserve, last week raised its funds target rate by 25 bps to between 0.25% and 0.50%. The Fed raised its benchmark interest rate for the first time in nearly a decade and also released an update on its projection for inflation and economic growth. The projections raised investor optimism over the pace of rising interest rates in 2016 that helped the overall US Dollar Index [I.USDX] to snap a two-week of losing streak. Last week's US economic data, except for data from US manufacturing sector, were also supportive of the Fed's eventual decision of a lift-off. The US Dollar (USD), however, lost some of its ground against Japanese Yen (JPY) after the Bank of Japan surprised investors by showing its unwillingness to further expand its economic stimulus measures. Nevertheless, I.USDX still managed to register over 1% gain for the week.
Going forward, this week's GDP data from US, UK and Canada along-with US durable goods orders and housing market data has the potential to spur some volatility in the market.
The key highlight from this week's US economic calendar is the final version of US GDP growth rate for the third-quarter of 2015, scheduled for release on Tuesday. According to the Commerce Department's second estimate, the US economy expanded by 2.1% annualized pace in the third-quarter of 2015 but economists this time are expecting the figure to be revised lower. Economists are forecasting the data to show that the economy expanded at a slightly slower pace of 1.9% as against 2.1% estimated earlier.
Investors will also have a look at the performance of US manufacturing sector with the release of durable goods orders for the month of November and is scheduled for release on Wednesday. In October, following a two months of consecutive declines durable goods orders registered a solid gain of 3.0% and core durable goods orders, that excludes transportation items, too printed better-than-expected number. For the month of November, durable goods orders are expected to decline by 0.6% while core durable goods orders, which excludes transportation items, are predicted to rise by 0.1%.
This week’s data from the US housing market features the release of existing home sales on Tuesday and new home sales on Wednesday. Existing home sales for the month of November are expected to moderate a bit to an annualize rate of 5.32 million units while new home sales are expected to reclaim 500k mark and come-in at a seasonally adjusted annual rate of 507,000 units.
Key highlights from this week's UK economic calendar features final GDP growth rate and current account deficit for the third-quarter of 2015, both scheduled for release on Wednesday. UK current account deficit has been constantly rising since last many quarters but managed to surprise the market by registering a surprise drop to £16.8 billion deficit in the previous quarter. Consensus estimates are looking for this week's print for the third-quarter of 2015 to climb back above £20.00 billion and show a current account deficit of £21.3 billion. Meanwhile, the final UK GDP print for the third-quarter of 2015 is expected to match the 0.5% growth recorded in the second estimate and hence is likely to prove as a non-event for the market.
Elsewhere, the fall in Canadian Dollar (CAD) against its US counterpart, primarily led by sharp decline in crude oil prices, could further accelerate should this week's monthly Canadian GDP data and retail sales data continues to portray weak economic fundamentals. Both, the Canadian GDP and retail sales data are scheduled for release on Wednesday. Other key economic release featuring this week's economic calendar includes the release of monthly New-Zealand trade balance data, scheduled on Tuesday.
Traditionally volumes during the year-end holiday season drop significantly and hence, market could be expected to remain quieter in the final two weeks of the year. However, a high degree of deviation from the expected data points, especially on the GDP front, might trigger some volatile moves in the Forex market.
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