Forex Market Forecast: The Top Themes For 2014

The toning down of the Eurozone crisis and increasing economic confidence all played a supportive role. Even the peripheral Eurozone countries are showing signs of improvement, which is crucial to the long-term survival of the EUR. However, the Eurozone is still a laggard in terms of generating an economic recovery. So while the Fed is reversing its easy money policies, the European Central Bank will still be in aggressive monetary stimulus mode. But a strong US economy will be like manna from heaven for the Eurozone, which should start noticeably recovering by H2. A strong US recovery does therefore limit downside risks for EUR/USD.

FOREX-Yen pulls away from lows as stocks fall

Trading conditions remained thin following the New Year’s holiday, while a severe snowstorm in the northeastern U.S. also kept activity light. In the week ahead, the Fed is to publish the minutes of its December meeting on Wednesday, while the U.S. jobs report for December is scheduled to be released on Friday. Meanwhile, interest rate decisions by the European Central Bank and the Bank of England will also be in focus.

FOREX-Dollar slides vs yen, euro on soft U.S. services data

The New Orders Index contracted after 52 consecutive months of growth for the first time since July 2009, falling to 49.4. However, the Employment Index ticked up to 55.8, indicating growth in employment for the 17th consecutive month and at a faster rate. In the euro zone, data released on Monday showed that the bloc’s services PMI came in at 51.0 in December, unchanged from the preliminary estimate and down slightly from 51.2 in November. Separate reports showed that activity in Spain’s private sector expanded at the fastest rate in 77 months, but activity in France and Italy contracted last month.

Forex – AUD/USD retains gains despite weak domestic, China services data

The euro zone Composite Purchasing Managers Index, which gauges how thousands of manufacturing and services companies fare every month, rose to 52.1 in December, in line with forecasts, with readings above 50 indicating growth. The upbeat euro zone data browse came ahead of the European Central Bank’s first policy meeting of 2014 on Thursday. While another rate cut after November’s surprise move is seen as unlikely, the bank has the ability to issue further cheap loans to banks. “The big question is whether the recovery in the euro zone is real or sustainable.

Forex – EUR/USD hits session highs after ISM PMI miss

The first full trading week of 2014 could offer investors more clues to the dollar’s direction in the months ahead. The minutes of the U.S. Federal Reserve’s December meeting are due on Wednesday. Policymakers decided at the meeting that they would begin to pare stimulus and cut asset purchases by $10 billion to $75 billion a month. The minutes could hint at the timing and pace of any further reductions in Fed stimulus. Friday will bring the December U.S.

Forex – NZD/USD steady after weak China PMI

Meanwhile, the dollar remained supported after comments from outgoing Federal Reserve Chairman Ben Bernanke boosted the outlook for the U.S. economy. On Friday, Bernanke said the U.S. economy should continue to improve in 2014, but added that the recovery remains incomplete. The kiwi was lower against the Australian dollar, with AUD/NZD edging up 0.18% to 1.0832. Later in the day, the U.S.


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