Market Forecast 31.01.2017

Dow Jones reached the 20,000 mark last week and the US economy is significantly showing an impressive upscale streak. However, reservations should still be held as the effects of the fiscal and economic policies that US President Donald Trump would implement have yet to be seen. So far, the tariff agreement and the TPP retreat by the US seem to provide the slide in the US dollar as opposed to the financial spending promised by President Trump.

In other areas, Japan is taking advantage of the export gains while China should re-assess its credit standing. Brexit is still pushing through despite SC Ruling on a vote.

Here are the news to be expected in the coming trading week:

US Reports

  • The Federal Reserve implemented its plans of continually increasing the benchmark interest rate expected among concerned parties. The fund rate is now at 0.75%, which marks the second rate hike in the last ten years. It is known that the Federal Reserve would support all measures to bring action on improving its monetary policy, which will propel the economy forward. President Donald Trump’s promised tax-cut and focus on infrastructure, as well as inflation, could provide further improvement on the economy. With the said policy to be set in motion, company net earnings would improve; thus, bringing in a more positive economic figure for the country.
  • This coming Wednesday, the PMI report would be released. It is forecasted that the figure would reflect 55 points, based on strong production reports and export highs. The said factors provided a strong foundation for a great start for the year. Crude Oil inventories also show significant increases, which is expected to result in another tick up on the reports to be released.
  • Thursday would see the release of Unemployment Claims, which still continue to fall below the 300,000 mark even with the increased figure of 259,000 last week. It is expected to drop to 251,000 this week.

Other Reports

  • Bank of England’s interest rate of 0.25% remained, although concerned parties were properly informed of increasing inflation, backed with a decline in wage improvement that would affect UK households. The bank would hold on to the current rate all throughout 2017, as it would still weigh in on how Brexit would affect the country’s economic growth.
  • Bank of Japan still left their current monetary policies unchanged because the said policies are still in line with the country’s market forecast.
  • China would release its Manufacturing PMI data this coming Wednesday and by Friday, it would release the Ciaxin Manufacturing PMI.
  • Canada would release its GDP data this coming Tuesday where the forecast would be a tick up of 0.1%. The manufacturing sector has seen a drop of 2% due to production slowdown, reflecting slow growth. With the country expecting an economic growth of 0.3% by November, the manufacturing sector should at least make a recovery to further boost its growth.
  • The EUR/USD could reach a high of 1.09 this coming trading week, with 1.05 the lowest, in comparison to last week’s target of 1.0750, which was not reached.

This week might see a set of a chain of events. The White House proposed an additional 20% tax on Mexican imports, increasing the inflation for agricultural products. In the end, it is the consumers that would shoulder the additional import tax that is likely to be approved. The market is also likely to be volatile, as major economic areas are following monetary policies that have a direct effect on the economy, hoping that they would work out. As an investor, the decisions should be properly understood. Remain cautious to leave room for setbacks and uncertainties.