We are now on the last few trading days for the year. Although volumes are low, it does not necessarily mean that 2019 will end quietly. In fact, we have a few economic reports from the world’s largest economies that could provide volatility in next week’s trading.
PMIs and FOMC Meeting Minutes Due from the US
We kick things off on Monday with the Chicago PMI report for December. The forecast is for the report to show that economic conditions deteriorated slightly during the month. The consensus is down at 45.7 from the November reading at 46.3. Along with it, the pending home sales report for November is anticipated to show a 0.4% uptick after it posted a 1.7% contraction in October.
Then on Tuesday, the Conference Board’s December consumer confidence index for December is eyed to print at 122.6. It is a bit lower than the November figure which is at 125.5 which suggests that optimism among consumers wavered during the month.
On Friday, the ISM manufacturing report for December will be on deck. Market participants eye the report to print at 48.3 versus the 48.1 reading for November. While it’s not over the 50.0 baseline which would suggest an expansion of business activity in the sector, it does suggest improving conditions.
Lastly, we wrap things up with the FOMC meeting minutes. If you remember, the central bank kept rates steady in their last rate decision this December. Investors will be looking for clues that would indicate when the FOMC would cut rates again. After all, Federal Reserve Chairman Jerome Powell has warned that they may ease further if economic data takes a turn for the worse.
USDCHF will be an interesting pair to look at next week. Currently, it is testing support at the rising trend line (when you connect the lows of September 16, 2018, June 23, 2019, and August 11, 2019) on the weekly time frame. Better-than-expected numbers or a hawkish FOMC meeting minutes may help USDCHF bounce off support at 0.9750. On the other hand, worse-than-expected data or a dovish FOMC meeting minutes could send it to its 2019 lows at 0.9658.
USDCHF Weekly Chart
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Chinese PMIs Due Next Week
China will also be releasing its own set of PMI reports next week. On Tuesday, the CFLP will release its manufacturing and non-manufacturing PMIs for December. The manufacturing PMI is expected to reveal a contraction in business activity with the forecast below the 50.0 baseline reading at 49.8. Meanwhile, the services sector is expected to have expanded during the month with the forecast at 53.6. Then on Thursday, Markit will release its own version of the manufacturing PMI and the forecast is at 51.7.
Positive Chinese data could help fuel the rally on NZDUSD. On the weekly chart, we can see that the currency pair has successfully broken through resistance on the falling trend line (from connecting the highs of February 11, 2018, April 8, 2018, March 17, 2019, and July 21, 2019).
NZDUSD weekly chart
Second-Tier Data from Europe on Deck
There are also some data due from the euro zone next week. The biggest of them will be the French and German preliminary CPI reports due on Friday. Their November figures are anticipated at 0.1% and 0.0%, respectively. Meanwhile, Germany’s unemployment change report is expected to show a drop of 18,000 while the unemployment rate is seen to have remained steady for November at 5.0%.
It will be interesting to see if these reports can help EURGBP break through resistance at the falling trend line (from connecting the highs of August 12 and October 9).