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Next week’s Forex forecast

Sergiy Zlyvko
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The coming week promises to be very interesting for all the outgoing 2013 year: Fed Chairman Bernanke will probably make its last meeting as chairman and may complete his seven-year term beginning of the end of incentives. Sure, even the likelihood of such an outcome makes the pressure on the dynamics of stock markets already and the impact on profitability of Treasuries and that is to chop off the prospect of pre-Christmas rally on the trading floors can get Ben to reduce the volume of buying only a symbolic amount. However, even in such a case, it will be enough to reintroduce the demand for the U.S. dollar, especially against the yen and the British pound. In addition to the FOMC meeting could attract attention for final approval of Janet Yellen as a new chief of the Fed, CPI, housing market data, industrial production and regional studies of business activity.

Despite the fact that the last time the U.S. dollar has strengthened its position, the uptrend in EURUSD has not been canceled: the pair could come very close to a two-year high 1.3830 and very discreetly declined on strong U.S. data. This week will determine what how the pair is fluctuating: temporary consolidation before the next jerk up or trend reversal. Eurozone in the coming days will release a lot of interesting reports, which can also make adjustments to the dynamics of the EURUSD: PMI index as well as Ifo and ZEW research results.

GBPUSD slowed down somewhat, having surrendered under the pressure of strong economic indicators from the U.S., however, this does not mean that the British pound lost the fuse. Coming week can help the currency to rehabilitate thanks to the release of several quite important reports. Minutes of the last meeting of the MPC may show a more optimistic representative of the Committee regarding economic prospects of the country. In addition, consumer price index, employment levels and retail sales are also expected to exceed predicted values that can strengthen the position of the pair, but only under the condition that FOMC would not dare the folding.

Despite the fact that coming week will be so full of important events that Japan also will contribute to the overall dynamics of the foreign exchange market. We expect to publish quarterly Tankan report, which will present the data from a study of trust in the industrial and service sectors. Stimulus measures taken by Japanese authorities, helped the economy get back on the path to recovery with a good pace. Thus, we expect to exceed forecasts within the report that the Nikkei index will help strengthen and support the USDJPY. Next week, due to several favorable factors the pair has great chances to go up to 105.00 level. On the background of Japan’s ultrasoft policy, FOMC desires to start QE3 folding and strong Tankan data from the pair just will not yield as new records noted.

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