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Next week Forex forecast

David Becker
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The coming week will be the first working week of the month and therefore it is traditionally rich in the important macroeconomic statistics and events that could have a significant impact on the prospects for the dollar and set the mood for the participants of the currency market on the whole December.

On Monday, December 2 at 15.00 GMT Institute for Supply Management will provide data on PMI index in the industrial sector of the U.S. economy. Then on Wednesday (15.00 GMT) it publishes a similar report on the services sector and ADP Inc will provide the figures on the number of new jobs created in November (13.15 GMT). On Thursday, the Bureau of Economic Analysis clarify GDP data for the third quarter (13.30 GMT) and will marry traditional week Friday report on the number of new jobs and the unemployment rate from the Bureau of Labor Statistics (December 6, 13.30 GMT).

Macroeconomic statistics from the U.S. started to improve in recent years and therefore we can expect positive deviations from the median of forecasts. Moreover, the labor market actively restored in October, when the economy added 204,000 employees. Strong new jobs release can increase the chances that Fed will take a step towards the reduction of the quantitative easing program in mid-December, although the market remains the dominant view that this will be done in mid-March. In general, the dollar, in our opinion, may attempt to return to the growth, but it will all depend on the quality of published statistics.

Single European currency traders will expect the outcome of the next ECB meeting. European regulator lowered the discount rate last time and gave reason to assume that it can decrease the rate again in the next few months. Although many experts agree that this time the cost will be the same, step down by 0.25 percentage points cannot be excluded. We recommend this day to be out of the market and to monitor developments on the part.

From technical analysis point of view, the closest major resistance level of current uptrend formed by the pair EURUSD is the mark of 1.3650. Overcoming it can open up the way to the 1.38 area, but that will require assistance from the ECB. Results of the meeting will be announced at 12.45 GMT and Mario Draghi will start a regular press conference at 13.30 GMT.

The British pound will expect the data on PMI indices in industry, construction and services, which will be published by Markit in the first three working days of the month in the same time (09.30 GMT). And on Thursday at 12.00 GMT Bank of England will announce the results of this meeting. Macroeconomic statistics from the UK is very positive and the regulator also expects continued rapid economic recovery. All this greatly strengthened the position of the sterling is unlikely to shake their strong, but weak reports on the PMI indices may be a reason for the correction. From the standpoint of technical analysis, the aim of the current uptrend is to define the level of 1.65.

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