Fundamental Weekly Forecasts for US Dollar, USDJPY, GBPUSD and AUDUSD
US Dollar Forecast– NFPs and the PCE inflation indicator will further stir hawkish Fed expectations, but the theme may be mature
The net change in payrolls isn’t nearly as important
as the ‘qualitative’ figures. The jobless rate has already touched past
year milestones for rate hikes – a few years ago, then Chairman Ben
Bernanke tied a first rate hike to an unemployment rate of under 6.5
percent. It is currently 5.6 percent. Perhaps the inflation aspect of
the labor data is the lynchpin. Wage growth has struggled to catch
traction. A particularly weak showing here, on the other hand, could
reinforce the more distant timeline the market has on hikes and instead
lead to a downgrade in FOMC forecasts at the March meeting.
Japanese Yen Forecast – Disappointing US economic data enough to keep pressure on USDJPY
The correlation between the USDJPY and the Nikkei
225 index has weakened notably as of late; recent gains in Japanese
equities have not been enough to lift the exchange rate. Yet a further
rise in equity market volatility would likely restore said link, and
we’ll keep a close eye on global equity markets as the US S&P 500 registers its second-consecutive monthly decline. Continued losses could be enough to send the USDJPY through key support.
British Pound Forecast – Pound May Rise as 4Q UK GDP Data Boosts BOE Rate Hike Bets
GBP/USD may continue to carve a string of
lower-highs in the week ahead as market participants speculate the
Federal Reserve to normalize monetary policy ahead of its U.K.
counterpart, and the pair remains at risk for a further decline over the
near-term as the Relative Strength Index (RSI) largely preserves the
bearish momentum carried over from the previous year.
Australian Dollar Forecast – Australian Dollar May Bounce if RBA Opts Against Dovish Posture
Realized data outcomes have also increasingly
outperformed relative to consensus forecasts since the last RBA outing
in December. If this encourages the RBA to look through near-term price
declines and fall in with the Fed/BOE side of the argument – catching
markets off-guard with another neutral policy statement – a swift Aussie Dollar rebound is likely in the cards.
