Weekly Outlook : Feb 1st-Feb 5th

Goood Monday Traders, we are back for a new week of a new month. The start of the year will always prove to be a good stresspoint, as many pundits, analysts and experts will give their opinion for the year ahead. With central banks and governments too getting into the thick of things, you will have many different views giving an in-depth and also confused/contradicting options. Therefore, as the dust settles, and after seeing some market movements for the first month so far, perhaps, further details can be analyzed.

As for the last week of Jan, here is what has happened so far. All of the major currencies are benchmarked here against the USD to see how they have fared;

Eur = – 2.06%

Jpy = -0.34%

Chf = -1.92%

Cad = -1.3%

Aud =-2.03%

Nzd =-1.65%

Gold =-1.2%

As we can obviously see, the clear winner across the board has been the USD, which has gained across all currencies.

There is no surprise here as the dollar rally has been mentioned for sometime. However, rather than a dollar rally, this is more due to risk aversion rather than dollar strength. The dollar already in its beaten state, is in no signs of a recovery as yet. Make no mistake that even though with Dec’s NFP and Jan’s GDP giving positive rise beyond expectations, the US economy is not recovering as yet. It is having a short term burst at best and from the fundamental aspect of events and fiscal policies’ timings, i expect the best that this could sustain will be till around end Feb-Mar, possibly sooner.

You see, we have had almost a year of unprecedented growth(i call it recovery) since our lows from the 08 crisis. I had given my statistics and reasons to believe this is short lived in this earlier article.

For the month of Jan, the USD Index has gained an impressive 3.25% since its Mid Jan lows.

USD Index gained an impressive 3+%in Jan alone

Though the dollar bulls will be still blowing their trumpets and getting their herds to follow in their direction. I am against getting into the trend at this stage. In fact, i am looking at other pairs due to fundamental reasons and i will share more with you about that in our next post.

As for what is ahead this week, we have a week full of jam packed news with exciting events all lined up.

Here is a quick summary and overview of events;

Mon – GBP Manufacturing PMI

Tues – AUD Cash Rate
AUD RBA Rate Statement

Wed – AUD Trade Balance
GBP Services PMI
USD ADP Non-Farm Employment Change

Thu – NZD Employment Change/Unemployment Rate
- AUD Building Approvals/Retail Sales
- GBP Official Bank Rate
- EUR Minimum Bid Rate

Fri – USD – Non Farm Payroll

As with the commodities, an interesting correlation has been picked up amongst the major ccy pairs i am watching when it comes to commodities.

A picture speaks a thousand words so i am sure you can see exactly what i mean. Hint: Look at the percentage recovery since the lows for all these 3 pairs;