A week of key economic events for the U.S. Dollar

29 January, 2013

Investors this week wait for a heavy slate of top-tier U.S. economic data, starting with Durable Goods Orders on Monday and ending with the employment reports for January on Friday. In-between is the U.S. fourth-quarter advance GDP data and outcome of the Federal Reserve’s first meeting of the year.
A busy economic calendar kicks off with December orders for durable goods on Monday. Economists concsensus forecast for a 1.8% jump in orders for December after a 0.8% rise in November.
A related report, the Institute of Supply Management's manufacturing PMI for January, scheduled for release on Friday, is expected to hold steady above the 50% mark that indicates expansion.
U.S. GDP, Fed policy decision and monthly jobs report to remain the top agenda for the week
The U.S. labor market has been showing strength recently. The latest weekly unemployment claims at the lowest level since January 2008, probably reflecting improved hiring, have raised optimism from the jobs report. The January jobs report, scheduled for release on Friday, is expected to show, the U.S. economy likely added 156,000 jobs in the first month of 2013, continuing with the recent pace of job creation in the range of 150,000-plus. The unemployment rate, however, is expected to remain high but hold steady at 7.8%.
              U.S. Unemployment Rate (Source: United States Department of Labor)
Meanwhile, no policy change is expected from the Fed, when it concludes the first policy meeting of 2013 on Wednesday. The Fed is expected to continue injecting liquidity (QE program) into the economy until the jobless rate falls to its targeted 6.5% rate.
Also on Wednesday, the government is scheduled to report the estimated (first release) U.S. GDP data for the final three months of 2012. Consensus estimate that the U.S. economy expanded at a 1.3% in the fourth-quarter of 2012.
  • With better economic data, the appetite for risk improves, which sometimes dent value of the U.S. Dollar against the so-called riskier currencies.
Technical Outlook
  • EURO on Friday struck its strongest level (1.3478) since February 2012, as the ECB said European banks would pay back 137.2 billion Euros of cheap, three-year loans made in the December 2011 (Long-Term Refinancing Operation, or LTRO) on Jan. 30.
  • EURUSD is currently traded at 1.3434, finding resistance near 1.3490 – 1.3510 zone, the 50% Fibonacci Retracement Level of 1.4939 - 1.2042 move also coinciding with the upper trend-line of the ascending channel formed on daily charts.
  • Should the pair manage to decisively strengthen above 1.350 resistance zone, the positive momentum seems to continue in the near-term and the pair could further appreciate towards 1.380 resistance representing the 61.8% retracement level.
  • On the downside 1.340 – 1.3380 zone may now act as immediate support followed by a strong support near 1.3250 area.
  • Should the pair slip below 1.3250 support zone, it might pull-back further towards 1.3150 - the 38.2% retracement level and the lower trend-line of the ascending channel.
  • GBPUSD seems to have formed a classic Double-Top chart pattern on daily chart near 1.630 - 1.6320 zone and the formation seems to have been confirmed since the pair has decisively slipped below the very important support near 1.5820 - 1.5780 zone.
  • The GBPUSD now seems to depreciate further towards 1.5680 immediate support level representing the 61.8% Fibonacci Retracement Level of June 2012 lows (1.5268) to Jan. 2013 high (1.6339) move. Further, the pair also seems vulnerable to fall further and test 1.5350 (June closing low) in the near-term.
  • On the upside, 1.5780 - 1.5820 support turned resistance could now act as immediate strong hurdle for the currency pair.
  • Any up-move beyond the 1.5820 resistance is likely to be capped near 1.5900 level, the 200-day SMA.

USD/CAD: Current outlook for January 23, 201324 Jan, 2013  

The pair reached the 0.9980-1.0055 resistance area, right where the 200-Day SMA resides. A clear break above this area would confirm the medium-term uptrend towards the 1.0250 resistance...

GBP/USD: Current outlook for January 16, 201318 Jan, 2013  

The pair is trading below the 1.6000-1.6060 support-turned-resistance area, which contains the 50-Day SMA and the 100-Day SMA, so we see the risks of additional setbacks towards the 200-Day SMA by 1.5900 or the 1.5750 support...

EUR/USD: Current outlook for January 15, 201315 Jan, 2013  

The pair is consolidating above the 1.3300 resistance, thus confirming the medium-term upside run above the 1.3500 resistance towards the 1.4000 level...