Saturday, January 29, 2011

Forex Weekly Outlook - January 31 - February 4

*US Employment Data as well as ISM Purchasing Managers' Index are
the main events on this busy week. Here is an outlook on the major
market movers.*

Following the US rate meeting, the Fed said that despite signs if a
real recovery, high unemployment still calls for the continuation of
the $600 billion bond-buying program. Nevertheless commodity prices
are rising creating a moderate inflation that may urge the Fed to hike
rates this year.

* *Canadian GDP:* Monday, 13:30. Real GDP gained 0.2% in October,
following a decline of 0.1% in September mainly due to Mining &
oil & gas extraction activity. In light of this another slow
growth quarter is expected. The same gain of 0.2% is expected now.

* *Australian Rate Decision:* Tuesday, 3:30. At its last meeting,
the Reserve Bank of Australia decided to leave the cash rate
unchanged at 4.75%, after hiking it by 0.25% in November. This
decision comes in line with expectations. The Reserve Bank does
not expect major inflation growth over the next few quarters. Cash
rate is predicted to remain 4.75%.

* *US* *ISM Manufacturing PMI:* Tuesday, 15:00. Manufacturing
activity in the U.S. rose to 58.5 in December after dropping to
56.6 in November while analysts had expected 57.3. PMI has
remained above the neutral 50.0 mark for 17 consecutive months
indicating industry expansion trend. A small decrease to 57.7 is
likely to occur.

* *American ADP Non-Farm Employment Change:* Wednesday, 13:15. U.S.
non-farm private employment rose by a seasonally adjusted 297K in
December, after rising by 92K in November. Analysts had expected a
101K gain. This is the eleventh consecutive monthly gain and the
largest monthly increase in the history of the report. A smaller
rise of 151K is forecasted.

* *New Zealand**'s Employment Data:* Wednesday, 21:45.
Unemployment rate in New Zealand fell to 6.4% reaching 150,000 in
the third quarter of 2010 better than 6.7% expected following 6.9%
in the previous quarter. New Zealand's economy is in growth for
five consecutive quarters resulting in more businesses hiring new
workers with 0.1% gain in new jobs. Unemployment rate is predicted
to rise to 6.5% and the job market is expected another rise of
0.2% new jobs.

* *Euro-Zone Rate Decision:* Thursday, 12:45. The set the benchmark
rate at 1% for the 21st month in line with predictions. The Low
rates provide liquidity in the market to encourage growth. The ECB
has to decide when to stop buying government assets, withdraw
unlimited liquidity provision for banks and possibly even raise
rates to stem inflation risks. Minimum Bid Rate is expected to
remain 1.0%.

* *US Unemployment Claims: Thursday 13:30.* A setback in the Job
market was registered last week with a drastic rise of initial
unemployment claims amounting to 454,000 from 403,000 in the
previous week, much worse than the 407,000 predicted. Jobless
claims can differ from week to week and the recent snowstorms and
layoffs of temporary holiday workers could explain January

* *US* *ISM Non-Manufacturing PMI:* Thursday, 15:00. The service
sector in the U.S. grew more-than-expected in December reaching to
57.1 after 55.0 in November, expanding for the eleventh
consecutive month. Analysts had expected the index to rise to
55.7. This climb indicates expansion in the US market. A further
growth to 57.3 is predicted now.

* *Bernanke Speaks:* Thursday, 18:00. Federal Reserve Chairman Ben
Bernanke is due to deliver a speech titled "The Economic Outlook
and Macroeconomic Policies" at the National Press Club Luncheon,
in Washington DC where he may elaborate on his view to continue
the $600 billion bond-buying plan due to the fragile job market
situation. His words have major influence in the markets.

* *American Non-Farm Employment Change:* Friday, 13:30. December
payrolls gained a disappointing 103,000 while expecting an
increase of 159 000 following 71,000 in December. The relatively
low figure comes as a surprise in light of the strong ADP report.
A rise of 132,000 is expected now.

* *US Unemployment Rate:* Friday 13:30. The unemployment rate
dropped to 9.4% in December from 9.8% in November the biggest
one-month decline since April 1998. Economists had been expecting
the unemployment rate to remain flat. The latest increase in job
growth is another sign that the U.S. economy is gradually emerging
from its malaise following the official end of the recession in
the summer of 2009. Unemployment Rate is expected to grow to
9.5% this month.

* All times are GMT.


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