CIBfx Weekly Markets Forecast 20/12/2016 by CIBFX
The short-term interest rate has been increased by the US Federal Reserve last Tuesday, which has resulted in a record high for the US stock indexes. Furthermore, the US Fed is also planning a three-part hike on the rate for the year 2017. It is quite remarkable that the US economy is seen to improve over the coming year, with the possibility of a continued hike of the said rate. Oil prices were also forecasted to hit the $60 per barrel price share for the coming year. The US economy is still seen as being in the bullish mode, as the released reports are all optimistic of producing positive effects. Here’s an outlook for the coming week December 19-23, 2016.
- US Reports – Wednesday would see the release of the US Crude Oil Inventories report. In contrast to the past forecast of the 1.4 million barrels decrease, it exceeded the said figure with a staggering 2.6 million barrels.
Thursday would be the release of US Durable Goods Orders, expected with a 0.2% increase against a 4.8% figure for October. The increase for the past month was attributed to a strong commercial aircraft demand and the maintenance of a slow but steady growth in the country’s manufacturing industry. The US GDP Data for the third quarter is forecasted at a 3.3% figure, after exceeding expectations from the previous quarter. The increase was attributed to increases in exports and increased investments in the country itself; thus providing a positive outlook. US Unemployment Claims is forecasted at a figure of 255,000 which would still continue the trend of being below 300,000 for the 93rd time.
- Interest Decision in Japan – The Bank of Japan will be holding a meeting this coming Tuesday to come up with a decision regarding their monetary policy. During the last November meeting, the bank retained its current policy even though it was not able to meet its inflation rate deadline. As expected, the said target inflation rate would be achieved only by 2018. Based on what the Bank of Japan is currently feeding the news, they said that the policy would still stay as long as no event would cause the unstable economic status of the country to continue, particularly its decline against foreign currencies. Deflation is a major factor to be considered in the meeting, since it really affects the foreign investments in the country.
- Canadian GDP Report – 2017 is forecasted to have an overall growth of 2% from the 1.1% of 2016, according to the Bank of Canada. The third quarter Canadian GDP report is forecasted to have an increase of 0.1%. The second quarter GDP report also forecasts a gain, which is attributed to the increased exports of energy products.
- New Zealand GDP – The third quarter GDP report is forecasted at 0.8%, after a 0.9% growth report for the second quarter. Both export and the country’s own demand for products is still paving the way for a positive outlook on the country’s economic stability. The overall growth figure would be forecasted at 3.7%. These optimistic figures would still uphold the policy of not cutting rates as suggested by the Reserve Bank of New Zealand.
- Ifo Business Climate Index for Germany – The December 2016 business sentiment would reach 110.7, as forecasted, compared to 110.4. The US election has currently no effect on the German economy, but with Brexit and the elections, the effect is seen to come later within the next period.
- The EUR/USD would still have a bearish outlook in the coming week as on the Euro side, European Central is continuing its bond buy-off to stabilize the Eurozone. Meanwhile, the US side is chomping up on how the Trump policies would affect the overall picture of both economies. The Euro/USD, as forecasted, could be seen dropping for the coming week.