Forex Market Outlook Jan 27 to 31
Yes, it’s another week and we are back again to do a Forex market outlook for the week of January 27 to 31. There were some indications of risk aversion present as of late, in large brought on by the Chinese coronavirus. For the future week, heavy market volatility can be expected as BREXIT is coming to a head. The USA is also expected to announce monetary policy changes and decisions. Here we have a Forex market outlook for the week of Jan 27, based on important economic data released across the world.
Forex Market Outlook – United States Consumer Confidence
When it comes to consumer spending in the USA, it is not likely to increase this week or in the early part of 2020. This is indicated by the Consumer Confidence Index from the United States Conference Board. During November 2019, consumer confidence and spending increased slightly, but then slightly decreased in December of 2019.
The consumer confidence index came down from 126.8 in November 2019 to 126.5 in December. Although the Present Situation Index increased from 166.6 to 170, the Expectations Index to a hit, dropping from 100.3 last month to 97.4 this month. The overall forecast for the remaining part of January 2020 is a consumer confidence of 128.2.
Forex Market Outlook – USA Federal Funds Rate
The USA Federal Reserve appears to be holding interest rates steady between 1.5% and 1.75%, with no expectation for this to change during the course of 2020. This is completely coherent with analyst’s expectations and is not expected to change.
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Forex Market Outlook – German IFO Business Climate
The German IFO Business Index Climate is currently doing quite well. The expectations from analysts, for December of 2019 was a level of 95.5 on the Business Climate Index, which was actually beaten. December 2019 saw a German IFO Business Climate Index ranking of 96.3. The reading for December 2019 was at the highest level in half a year, and had not been reached since June of 2019.
This rise in the IFO Business Index was due to the improved sentiment of service providers and manufacturers, as well as their assessments of high expectations. The German IFO Business Index is forecasted to continue the upward trend and should rise to a level of 97.1 by the end of the month.
Forex Market Outlook – Australian CPI & Trimmed Mean CPI
The Australian Trimmed Mean CPI rose by 0.4% in the final quarters of 2019, and is expected to continue upward momentum. On that same note, in Australia, the consumer price index in Australia also rose steadily during the final quarters of 2019 and are expected to continue the increase for the beginning quarter of 2020.
There was a large decline in price for vegetables, fruits, and auto fuel, but an increase in the prices of international holiday travel, accommodation, tobacco, property rates and charges, and child care as well. Both the CPI and the Trimmed Mean CPI in Australia are expected to continue an upward trend for the first quarter of 2020.
Forex Market Outlook – Canadian GDP
The Canadian economy is definitely one of the big ones to keep an eye on for January and the first quarter of 2020 in general. During 2019, the Canadian economy grew by roughly 0.3% on a quarter by quarter basis, but this was a decrease from the 0.9% increase from the preceding period.
The two driving factors for growth included increased household spending and increased business investments. On an annual basis, the real GDP growth in the Canadian economy was 1.3% for the final quarter of 2019. For January 2020, and for the first quarter of 2020, it is expected that the Canadian economy and GDP will continue to increase at somewhat reserved rate.
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Forex Market Outlook – USA Advance GDP
The American economy also experienced moderate growth during the third and fourth quarters of 2019, both based on an annualized basis. The second quarter of 2019 saw a 2% GDP growth, with a 2.1% increase in the third quarter of 2019, and roughly a 2% increase in the fourth quarter.
This rise in the GDP and the American economy can be attributed to positive federal government spending as well as state and local government spending. The increase can also be attributed to increased residential investment. The American economy and GDP is expected to continue with this upward trend for the time being.
Forex Market Outlook – Bank of England Monetary Policy & Rates
The Bank of England recently held a vote in December of 2019 and decided to hold the official bank rate at the current level of 0.75%. The reason for this lack of movement has to do with the recent election of the new British Prime Minister, Boris Johnson, as well as the possible implications of BREXIT.
The Bank of England interest rate is expected to hold steady at 0.75% for the time being, although due to concerns with employment, the interest rate may drop in the coming months. Monetary policies are expected to change due to BREXIT, employment issues, public spending, and the implications of what might occur due to a new Prime minister.
Forex Market Outlook – Chinese Manufacturing PMI
The Chinese manufacturing PMI is expected to more or less hold steady at the current rate. The NBS reported a manufacturing PMI of 50.2 in December of 2019, which was slightly above the expected level of 50.1. The Chinese government has recently enacted stimulus measures in an attempt to drive manufacturing.
There also seems to be a great deal of optimism in regard to the outcome of the ongoing trade war with the USA. The growth of output accelerated slightly, exports have rebounded, and orders for export have increased again, plus business sentiment seems to have increased. However, input prices rose and selling prices have decline for nearly 8 months steady, as well, employment rates fell further. The expected China manufacturing PMI for January 2020 is 50.1.
In terms of the Forex market outlook for the week, it appears as though this is going to be a very volatile and eventful week, with Chinese, America, British, and Australian currencies being at the forefront of recent and ongoing economic developments.
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