Weekly Forex Forecast January 27

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It’s time for our weekly Forex forecast for January 27, and this week we will be focusing on 4 main Forex pairs you need to keep an eye on.

Weekly Forex Forecast – EUR/USD

When it comes to the EUR/USD forecast for the coming week, volatility is one word we would use strongly. For the fourth straight week, the EUR/USD has experienced a losing week, with the symbolic level of 1.10 now having been achieved. The expectations for the Germany economy have risen sharply from the end of last year, from 10.7 in December to 26.7 in January. This can also be said for the Euro-zone in general, which saw a sharp increase from 11.2 points in December 2019 to 25.6 points in January of 2020.

The ECB is maintaining current interest rates of 0%, with German services PMI being at a 5 month high. German manufacturing PMI also increased, yet still appears to be contracting. When it comes to the USA, the week so far has been fairly quiet, with unemployment rates lower than expected. However, the manufacturing PMI for the USA has slowed down a bit, although the PMI in the USA services sector has improved and currently sits at a 10 month high.

German business confidence reached 96.3 in December 2019, up by more than a point from November 2019. This increase is expected to continue into January and February, and should reach 97.1 points.
The German consumer climate is expected to remain at 9.6 points, just like in December.
Private loans and the M3 money supply have remained relatively unchanged since November of 2019.
German consumer inflation rebounded, gaining 0.5% in December, following a 0.8% decline in the following release.
Eurozone inflation estimates for the January CPI is projected at 1.4%, a slight increase over the 1.3% gain in December.

When all is said and done, for the weekly Forex forecast in regard to the EUR/USD, it appears to be continuing in a bearish trend. Safe haven assets such as the USD have seen a boost due to the outbreak of the coronavirus in China, while the European economy continues its struggle.

Weekly Forex Forecast – USD/CAD

Unlike the EUR/USD, USD/CAD posted gains for the third straight week in a row. GDP is going to be a big factor in the upcoming week, so let’s take a closer look. The Bank of Canada has help interest rates at 1.75%, with consumer inflation stalling at 0%. The core CPI of Canada decreased by 0.4%, but retail sales did increase by 0.9%, well above the 0.6% estimate. This actually marks the strongest gain in eight months, with a core release gain of 0.2%.

In terms of the USA, once again, things were fairly quiet, with unemployment claims at 211,000, beating the estimate of 214,000. This indicator has beaten the projected forecast for a third straight week. However, the manufacturing PMI slowed in the last month, which came in at 51.7, well under the forecast. The PMI in the USA service sector did however increase.

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. It is expected that the USD/CAD will continue a bullish trend, as investors are looking for safe haven assets such as the USD. CAD seems to be a riskier asset for the time being.

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Weekly Forex Forecast – GBP/USD

GBP/USD featured some very light gains this last week and there are a few upcoming events this week which may bring about a large shift. In the UK, from unemployment was cut nearly in half and is expected to continue its decline into this new year.

At the same time as unemployment dropped, wage increases rose by over 3%. In Britain both the services PMI and the manufacturing PMI increased and came in above their respective estimates.

As already noted above, when it comes to the USA, the week so far has been fairly quiet, with unemployment rates lower than expected. However, the manufacturing PMI for the USA has slowed down a bit, although the PMI in the USA services sector has improved and currently sits at a 10 month high.

The UK major banks reported a large upturn in the amount of mortgages being approved.
UK manufacturers are expecting higher sales volumes in January than in December.
The British consumer inflation indicator continues to decline, but may improve for January.
The Bank of England appears to be maintaining benchmark interest rates at 0.75%.
British consumers appear to remain extremely pessimistic about the economy.

Ion terms of the weekly Forex forecast, our view on the GBP/USD is fairly neutral, with not many changes expected. Although, BREXIT and negotiations with the EU could take a toll on the British Pound.

Weekly Forex Forecast – AUD/USD

AUD/USD declined for the fourth straight week and is not close to the 0.68 level. In Australia, unemployment rates have decreased for the second month in a row and inflation expectations have been quite strong.

The severe slowdown of the Chinese economy has caused a slowdown of the Australian economy.
In Australia, private lending and borrowing is still extremely weak, with the trimmed mean CPI looking as though it will not change.

AUD/USD appears to remain bearish for the time being as Australia continues to struggle in this new year.

Weekly Forex Forecast – Final Thoughts

In terms of the weekly Forex forecast for the week of January 27^th, AUD/USD appears to remain bearish, GBP/USD is fairly neutral, USD/CAD will continue a bullish trend, and EUR/USD is continuing a bearish trend.

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