Forex and Commodity Markets Outlook

BinaryOptionsNow | Published on December 19, 2016 at 9:12 am

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The U.S. dollar has been surging in the days since the surprise election of Donald Trump as the 45th president of the U.S., with the currency hitting 14-year peak last Thursday. Crude oil prices have also been rising since the OPEC members and some nonmembers of the cartel agreed to cap their output.

Several events are lined for this week that could have significant effects on the markets.

Monday, Dec. 19: Key economic data out of Germany and New Zealand

Germany and New Zealand are reporting key economic data Monday, December 19. New Zealand is releasing private sector business confidence data, while the Ifo Institute is reporting German’s business climate.

The Ifo Institute report is on many investors’ radar. Economists expect the monthly business sentiment reading to be 110.7. That would be the highest monthly reading since April 2014. Upbeat Ifo Institute report could to lift the euro, which has been rattled by a surging dollar and populist sentiment in the Eurozone since Brexit in June and Trump’s stunning victory in the U.S. elections last month.

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Positive German and U.K. economic data could strengthen the euro and delay the reality of dollar catching up.

Positive German and U.K. economic data could strengthen the euro and delay the reality of dollar catching up.

Tuesday, Dec. 20: Central banks in Japan and Australian to make key updates

The Reserve Bank of Australia will release minutes of its latest policy meeting Tuesday, and investors will be looking into the records for clues of the central bank’s view of the economy. Signs of hawkishness could lift the Australian dollar (AUD).

The Bank of Japan is also set to update on benchmark interest rate. Economists are forecasting that BOJ will maintain negative interest rate at -0.1%. Investors will look into the updates for signs of economic recovery and the yen could rise or fall, depending on whether BOJ sounds hawkish or dovish concerning the economic outlook. But a weaker yen should be a boon for Japan’s export market.

Forex and Commodity Markets Outlook

USDJPY could edge up if the BOJ maintains the benchmark rate in the negative territory.

Wednesday, Dec. 21: Credit and housing data in the U.K. and U.S. could tilt forex market

The U.K. is releasing its public sector credit data on Wednesday, as the U.S. reports on existing home sales on the same day. Growth in public sector borrowing in the U.K. should signal improving economic sentiments, thereby lifting the pound (GBP) and the euro. Improvement in existing home sales in the U.S. could lift the dollar as it would add to the expectations of economic prosperity in the country as a new administration takes over the White House. Trump has signaled expanded government spending and favorable tax laws, including a tax cut to allow U.S. companies repatriate their offshore cash to invest in the country.

Thursday, Dec. 22: U.S. economic and jobless claims data to give clue on future Fed rate adjustment

Canada will release its retail data, and New Zealand will report its third-quarter economic growth on Thursday. On the same day, the U.S. will update on jobless claims, personal spending and economic growth among others. A drop in initial jobless claims and improvement in economic growth would firm hopes that the Federal Reserve can hike interest rates more quickly in the future.

Friday, Dec. 23: U.S. 3Q GDP final figures

The U.S. will report the final figures of third-quarter economic growth on Friday. Economists are predicting the economy expanded 3.3% in 3Q, up from 1.4% in 2Q. An earlier estimate put growth at 3.2%. Strong GDP figures could give the dollar more wings to fly higher.

In the commodity market, the events that could affect oil prices include the weekly report on U.S. oil stockpile that will be released on Wednesday. In the gold market, prices of the metal could rally if the coming economic reports in the U.S. turn out to be bearish.

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