Preview of the week: Vagaries of "thin" market, Canada and background statistics

The foreign exchange market is gradually falling into pre-holiday suspended animation. During the period of Catholic Christmas, when the main trading floors of the world are closed, traders focus on secondary fundamental factors or related topics that are hypothetical in nature. The "thin" market is particularly sensitive, therefore irregular price fluctuations cannot be ruled out, especially against the background of an almost empty economic calendar.

It is noteworthy that even the following week, which is the New Year's holiday, it will be more eventful than the current one which is the celebration of Christmas season on December 25 and 26 with a complete fall out of the work schedule. While, for example, releases are scheduled for December 31, and from January 2, the market is entirely included in the mainstream which is the publication of the Fed protocol, German inflation, and Nonfarm unemployment. This week, traders, in some parts, prefer to be out of the market summing up the results of the outgoing year and assessing the prospects for 2020.

analytics5e0066608f363.jpg

Nevertheless, the macroeconomic calendar of the currency market on December 23-27 is not completely empty. For example, the main news for this day will come from Canada where at the start of the American session they will publish key data on the growth of the national economy. Let me remind you that earlier this month, the Bank of Canada surprised the market with its "hawkish" attitude. This is contrary to the expectations of most analysts. The regulator not only did not soften the tone of its rhetoric but also showed optimism regarding the growth prospects of key macro-indicators of the country. Such a scenario was a surprise to the market, so the "looney" instantly collapsed to the base of the 31st figure. True, the bears did not achieve their main goal of reaching the 30th figure, and last week, the bulls seized the initiative amid a general strengthening of the American currency. Today, the looney has a chance to take revenge but only if the release comes out better than expected. According to the consensus forecast, Canada's GDP in October will grow to 0.1% on a monthly basis and slow down to 1.4% annually. It is worth noting that from July to September, the country economy gradually grew from 1.4% to 1.6%, so this rollback will have a negative impact on the Canadian dollar, although this scenario is taken into account in prices. If the release comes out in the green zone, the USD / CAD pair may return to the base of the 31st figure. s GDP in October will grow to 0.1% on a monthly basis and slow down to 1.4% annually. It is worth noting that from July to September, the country economy gradually grew from 1.4% to 1.6%, so this rollback will have a negative impact on the Canadian dollar, although this scenario is taken into account in prices. If the release comes out in the green zone, the USD / CAD pair may return to the base of the 31st figure. s GDP in October will grow to 0.1% on a monthly basis and slow down to 1.4% annually. It is worth noting that from July to September, the country economy gradually grew from 1.4% to 1.6%, so this rollback will have a negative impact on the Canadian dollar, although this scenario is taken into account in prices. If the release comes out in the green zone, the USD / CAD pair may return to the base of the 31st figure.

A pair of EUR / USD today will respond to minor US statistics. First of all, we are talking about data on the volume of orders for durable goods in the United States. In October, the indicator showed positive dynamics, having exited from the negative area (similarly, excluding transport). In November, experts predict conflicting dynamics where the overall indicator would slow down to 0.2% from the previous value of 0.6%, and then grow to 1.5%, without taking into account the transport. If both indicators collapse into the negative area, the dollar may be under pressure. Also, data will be published in the real estate market of the USA today which is about the volume of home sales in the primary market. This figure should recover slightly after the decline in October. However,

On Tuesday, December 24, most European trading floors will be closed for Christmas Eve. During the American session, the only macroeconomic report will be released which is about the Fed-Richmond manufacturing index. It is less influential, like its "brothers" (production indices of New York or Philadelphia), but taking into account an empty calendar can provoke volatility, especially if it deviates from the forecast values. According to the forecast, the index will exit the negative zone and reach the 1st point. This is a rather weak result because, at the beginning of this year, the indicator went in the range of 10-16 points. And if real numbers turn out to be lower than forecasted, then the dollar may again be under background pressure.

As I said above, December 25 and 26 fall out of the work schedule and certain news will come from Japan (for example, the head of the Bank of Japan will speak on Thursday), however, these fundamental factors, as a rule, do not significantly affect the market.

analytics5e00664ec8410.jpg

Nevertheless on Friday, the market "revives" as does the economic calendar, because first of all, the protocol of the last meeting of the ECB is quite interesting. Let me remind you that this was the first meeting chaired by Christine Lagarde. Despite many fears, she did not "drown" the euro as her rhetoric was restrained and balanced. Lagarde made it clear that the regulator will so far take a wait and see attitude, although it is ready to resort to further measures to stimulate the economy. The published protocol will make it possible to understand what moods are in the ECB camp, especially after the release of the inflation data.

In general, it is likely that in the coming days there will be "flat silence" on the foreign exchange market unless the financial world is shocked by any force majeure factor. For example, another Trump mood swings towards China.

The material has been provided by InstaForex Company - www.instaforex.com