Dollar Index - "The forecast for the U.S. Dollar will remain
as neutral for the week ahead. While near-term price action is bearish,
the longer-term up-trend and justification for such continues to exist
as the U.S. is still one of the few developed global economies even
debating the prospect of higher rates at the moment."
USD/JPY - "JGB yields may accelerate upward if this
happens, intensifying the BOJ vs. markets standoff. With that in mind,
the Yen’s path in the week ahead is as likely to be decided in
Washington, DC as it is in Tokyo. A relatively quiet week on the
relevant economic data front offers few distractions, leaving simmering
market tensions to their own devices."
AUD/USD - "It's not expected to alter current record-low
interest rates – on hold at 1.5% since August. But it may return market
focus to the domestic Australian economy. There, consumer demand and
pricing levels look a lot less healthy than does the white-hot export
sector. RBA Governor Phillip Lowe will speak in Sydney the following
day. It’s also a quiet week for scheduled international economic news."
NZD/USD - "The central bank may keep the door open to
further embark on its easing-cycle as the upward pressure in the New
Zealand dollar exchange rate ‘continues to generate negative inflation
in the tradables sector.’ In turn, Governor Wheeler may prepare New
Zealand households and businesses for another rate-cut as ‘significant
surplus capacity exists across the global economy,’ and the 0.8%
expansion in New Zealand Employment may do little to alter the RBNZ’s
cautious outlook as wage growth remains depressed. In turn, a slew of
dovish rhetoric from Governor Wheeler and Co. may spur near-term
headwinds for the New Zealand dollar as the central bank appears to be
in no rush to remove its accommodative policy stance."
USD/CAD - "The two significant pieces of economic data
next week come on Wednesday's Housing Starts, which is expected to show
207k starts, and could surprise as recent data showed Toronto homes
showing a supply shortage that is keeping prices elevated. Next week
will close with Canadian Unemployment figures, which showed a 46.1k
addition in December, and a reading of +53.7k is anticipated for January
payroll growth according to Bloomberg. One of the more exciting
components has been the shift toward full-time employment and
simultaneous drop in part-time employment, which is a fundamental factor
in longer-term economic growth."
USD/CNH - "Next week, China will also release the January foreign reserves read between February 6th and 7th, another top event to watch. Chinese individuals’ annual $50,000 quota on purchasing foreign exchange has been renewed on January 1st,
which may accelerate the drop in foreign reserves. According to
Bloomberg’s forecast, the January print is expected to fall to $3
trillion, a psychological level. Stabilizing Yuan rates and maintaining
foreign reserves are two targets that may not be easily achieved
together under China’s current capital control policy. Therefore,
Chinese regulators may prioritize one of them, a decision that could be
made around the key psychological level, and then impact the flexibility
of Yuan rates."