Major Market Moving Events For 6th Week of 2016

Author Haresh Menghani Category Fundamental Analysis 08 Feb 2016 Updated at 12:17 CET
During the first trading week of February, the US Dollar (USD) came under selling pressure on the back of weak economic data from the US. Last week's US economic data showed deterioration in both manufacturing and non-manufacturing sectors as depicted by weaker than expected readings of ISM manufacturing and non-manufacturing index. The monthly US jobs data, too, was below expectations, reflecting the slower pace of hiring in January with addition of 151,000 jobs. The bright spot from the jobs report was the fall in unemployment rate to 4.9%, marking the lowest level since Feb. 2008 and, a rise in wage growth and participation rate. Recent US economic data has raised concerns over strength of the US economy and seems to moderate expectations of a rate-hike by the Federal Reserve, leaving USD on the defensive mode. Finally, the overall US Dollar Index (I.USDX) ended the week with a sharp cut of over 2.5%.
 
Going forward, testimonies by the Fed Chair Janet Yellen is likely to be the headline grabber for the current week. Also US monthly retail sales, Euro-zone GDP data and UK manufacturing data are few other data points that would of interest for the Forex market participants. Let's have a brief outlook on some of the important market-moving events scheduled during the current trading week.
 
US Releases
On Wednesday and on Thursday, investors will be focusing on Federal Reserve Chair Janet Yellen's semi-annual testimony on monetary policy before the House of Financial Services Committee and the Senate Banking Committee, respectively. With the radical shift in global macro-economic conditions since December, when the Fed announced its first rate-hike in nearly a decade, investors will closely scrutinize the question and answer session, that will be followed by the testimony, in order to seek clarity over the timing of the next Fed rate-hike announcement.
 
On economic data front, retail sales data for the month of January is expected to further fuel concerns over the pace of consumer spending and point towards a weaker start in 2016. Following a decline by 0.1% in December, retail sales data for the month of January, scheduled for release on Friday, is expected to post a marginal 0.1% rise, while core retail sales that excludes automobile sales is expected to remain flat. Apart from the retail sales data, also watch-out for the preliminary release of University of Michigan's consumer sentiment index, on Friday. The Preliminary University of Michigan's Consumer Sentiment Index reading for February is expected to improve and come-in at 92.6 from downwardly revised reading of 92.0 in January.
 
Euro-zone GDP Data
From Euro-zone, key economic releases features the first release of the composite Euro-zone GDP data along-with GDP releases from Euro-zone's three largest economies, Germany, France and Italy for the fourth-quarter of 2015. The flash version of the 17-nation composite GDP, scheduled for release on Friday, is expected to show a growth of 0.3% and Euro-zone's three largest economies namely- Germany, France and Italy, are all expected to have expanded by 0.3% during the final quarter of 2015.
 
Economic releases affecting GBP Pairs
Economic releases that provide some tradable opportunities in GBP pairs includes UK manufacturing production data, which makes up around 80% of total industrial production from UK, and trade balance data. After posting declines of 0.4% for two consecutive months, UK manufacturing production for the month of December, scheduled for release on Wednesday, is expected to remain flat (0.0%) while industrial production is expected to register a decline of 0.1% on a month-on-month basis. Traders should also watch-out for UK trade balance data, which is scheduled for release on Tuesday and is expected to show a deficit of 10.4 billion Pounds for December.
 
Summing it all, this week's testimony by the Fed chair might prove to be a major trigger in determining the near-term direction for USD. This coupled with few but important economic releases would continue providing the required volatility for short-term traders in the Forex market.
 
 
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