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The Week Ahead, 23 to 27 January 2017

Mountain View

The U.S. Dollar started the week on a very weak note following a lower close on Friday, after Fed Yellen hinted a few potential rate hikes in the future, whilst still holding the Fed's cautious approach. In the upcoming week, the U.S. will focus on the housing market data and is scheduled to report the Existing Home Sales figure on Monday, and New Home Sales figure on Thursday. Traders attention will turn to the Durable Goods Orders and the GDP release on Friday. Analysts are expecting to see a slowdown to 2.2% in the fourth quarter.

Japanese Yen had a volatile week last week closing below 115 against the U.S. Dollar, after Trump said that he thought the U.S. Dollar was losing trade competitiveness as the currency is too strong. In the upcoming week, Japan will report All Industries Activity and Leading Index on Monday. On Tuesday, attention will turn to the Manufacturing PMI and Trade Balance. Trading volume and volatility will increase on Thursday night as Japan will report National, Tokyo and the BoJ Core Consumer Price Index.

The British Pound had a tough week last week opening at 1.20 against the greenback, as investors were awaiting the UK's PM Theresa May speech, which signalled a rather hard Brexit than soft. Sterling recovered the most during May's speech where she highlighted how the UK will leave the Europe Union and that the UK government will continue to negotiate for different avenues of free access with European leaders. On the upcoming economic calendar, the major news would be the UK EU membership Court Ruling and whether the government can invoke Article 50 without Parliamentary approval. The UK will also report the Public Sector Net Borrowing on Tuesday. Analysts expect to see a drop to around 7.20B. On Wednesday, the main mover will be the BoE's Governor Carney speech and on Thursday the U.K. will release their GDP for the last quarter of 2016.

Euro initially gained against Sterling at the open last week, but then closed lower at 0.865 on Friday following PM May's speech. The Euro has been in a bullish mode since the start of 2017 and the Brexit headlines will decide about the future direction of this common currency. Europe will open the week with the ECB President Draghi speech and Consumer Confidence release on Monday. Inflation focused data will be released on Tuesday when investors will be eyeing Manufacturing and Services PMI. On Wednesday, Germany will report Business Expectations and Business Climate Index. On that day, German Buba President will also be speaking.

The Australian Dollar continued to strengthen against the U.S. Dollar as Trump moved into White house on Friday. The Aussie closed the week above 0.755 on Friday. In the week ahead, there are not many economic headlines from this part of the world. Australia will release their CPI on Wednesday. Volatility will also increase during the Export and Import price Index and the PPI release on Friday.