Financial Markets Forecast for January 27-31

The forex and commodities markets demonstrated high volatility during the past week This week several reports will be released and may affect commodities, equities and forex markets; these include: FOMC meeting, U.S new and pending home sales, U.S GDP for the fourth quarter, EU’s employment report, China’s manufacturing PMI, EU monetary development, U.S consumer confidence, GB GDP for the fourth quarter, oil and gas EIA weekly update, ECOFIN and Euro-Group Summits and U.S. jobless claims. Here is a breakdown for the week of January 27th to January 31st referring to the U.S, Euro Area, China, Canada, Australia and Great Britain.

(All times GMT):

Monday, January 27th

09:00 – German Ifo Business Climate Index: This index comprises of the changes (on a monthly basis) in the manufacturers, builders, wholesalers, and retailers in Germany as of January. In the last report regarding December 2013, the business climate index slightly rose to 109.5;

All Day – Euro-Group Summits: The summit will be held in Brussels; the EU ministers of finance and Euro-Group President may pertain to the latest developments in Europe;

09:30 – Flash Great Britain GDP Q3 2013: This report will present the first estimate of the quarterly growth rate of the British economy for the fourth quarter of 2013; during the third quarter the GB economy expanded by 0.8% (Q-2-Q); if the growth rate further increases, it could affect the monetary policy of Bank of England and also affect GB pound;

15:00 – U.S. New Home Sales: This report will refer to December 2013; in the previous report (opens pdf; for November), the sales of new homes rose to an annual rate of 464,000 – a 4.5% rise (month-over-month); if the number of home sales keep rising, this may suggest the housing market in the U.S is reheating; this news may also affect the US dollar;

Tuesday, January 28th

All Day – ECOFIN Summit: The EU ministers of finance will meet and talk about the recent economic developments in EU;

13:30 – U.S Core Durable Goods: This monthly report regarding December may indirectly indicate the changes in U.S. demand for commodities such as oil and gas. As of November 2013, new orders of manufactured durable goods rose to $497.9 billion; if this report shows another rise in new orders, then it could pull up not only the USD but also commodities;

15:00 – U.S Consumer Confidence: Based on the last monthly update, for December, the consumer confidence index rose to 78.1 (month-over-month). The current expectations are that the January index may fall; this report might affect the USD;

Wednesday, January 29th

09:00 – Gfk German Consumer Climate Survey: This survey estimates Germany’s consumers’ economic climate (past and future economic conditions – on a monthly basis) for January. In the latest report for December 2013, the climate index slightly rose to 7.6;

09:00 – Euro Area Monetary Development: This monthly report will refer to the developments of the M3, M1 and loans to private sector in the Euro area as of December 2013. In the latest November report, the annual growth rate for M3 inched up to 1.5%; M1 declined to 6.5%. Finally, the annual growth rate of loans to private sector reached -2.3%. This news suggests the EU inflation is declining again as loans continue to shrink and the growth rate of M1 and M3 declines. The progress of the EU monetary base is likely to affect future ECB rate decisions;

12:15 –BOE Governor Carney Speaks: Governor Carney will speak at the Scottish Council for Development and Industry’s member luncheon, in Edinburgh;

15:30 – U.S Crude Oil Stockpiles Weekly report: The EIA (Energy Information Administration) will publish its weekly report on the U.S oil and petroleum stockpiles for the week ending on January 24th; the report will also present the shifts in imports, refinery input and production, which could provide some insight behind the latest shifts in the price of crude oil in the U.S; 

19:00 – FOMC Meeting and Statement: The will be the first FOMC meeting for this year will take place during January 28th and 29th. The FOMC will decide whether it will taper further QE3. Many analysts expect the FOMC will cut down QE3 by another $10 billion to $65 billion. This meeting won’t include a press conference and economic outlook so this meeting is likely to have smaller effect on financial markets. In any case, if the Fed introduces changes to its monetary policy, gold and silver prices might be strongly affected by this decision;

Thursday, January 30th

02:45 – China Manufacturing PMI (HSBC’s final estimate): This is HSBC’s last estimate of its December’s PMI index. Last month’s Manufacturing PMI reached 50.5 – i.e. China’s manufacturing sectors is expanding at a slightly slower rate than before. If the updated PMI index falls again, this will suggest China’s manufacturing conditions aren’t improving;

08:00 – KOF Economic Barometer: This monthly report estimates the developments in the Swiss economy in the upcoming months;

13:30 – First U.S GDP 4Q 2013 Estimate: This will be the first estimate of U.S’s fourth quarter 2013 real GDP growth. In the previous estimate the U.S GDP rose by 4.1% in the third quarter of 2013 (it was revised up). If the growth rate from third quarter of 2013 to the fourth quarter further rises, this could positively affect not only the US dollar but also commodities prices;

13:30 – U.S. Jobless Claims Weekly update:  This weekly report will refer to the changes in the initial jobless claims for the week ending on January 24th; in the previous report the jobless claims rose by 1k to reach 326k; this next weekly report may affect the U.S dollar and consequently commodities and stocks markets;

15:00 – U.S Pending Home Sales: This report shows the developments in pending home sales in the U.S during December; in the previous update for November, pending home sales index inched up by 0.2% (month-over-month). This report is another signal for the progress in the U.S housing market; if the index starts to fall again, it may drag down the U.S dollar;

15:30 – EIA U.S. Natural Gas Storage Update: The EIA weekly report refers to the U.S. natural gas market; the report presents the latest developments in natural gas production, storage, consumption and rates as of January 24th;

01:30 – Australia’s PPI: This quarterly update will refer to fourth quarter of 2013. During the third quarter of 2013, the producer price index rose by 1.9% compared to the second quarter of 2012 and by 1.3% compared to Q2 2013; this index may affect the Aussie dollar;

Friday, January 31st

10:00 – German Retail Sales: This monthly report will refer to December 2013. In the recent report, the volume of retail trade rose by 1.5% during November;

10:00 – EU CPI Flash Estimate: This index calculates the annual consumer price index of the Euro Area. According to last estimate, the annual CPI reached 0.8%, which is still well below the ECB’s target inflation of 2%. If the inflation rate starts to rise, this could indicate the EU economy is progressing. These developments could influence the ECB members with respect to ECB’s cash rate decision next week;

10:00 – EU Unemployment Rate: Last month’s report showed that the rate of unemployment remained flat at 12.1%. The rate remained high and around 12% throughout 2013. If the rate of unemployment remains elevated, it could adversely affect the Euro;

13:30 – Canada’s GDP by Industry: This monthly report shows the developments in major industrial sectors for November 2013. In the last update regarding October 2013, the real gross domestic product edged up by 0.3%. This report may affect the Canadian dollar, which is strongly correlated with commodities prices such as oil and gold;

02:00 – China Manufacturing PMI: As of December, the Manufacturing PMI slipped to 51 – i.e. China’s manufacturing sectors are expanding at a slower pace. If in the upcoming report the PMI falls again, it could signal slowdown in the growth rate in China’s manufacturing sectors, which could also negatively affect oil and gold prices;

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