Forex – Weekly Outlook: December 24 – 28

0 – With little data on the economic calendar in the week ahead, markets will likely focus more heavily on political headlines after the failure by the U.S. Congress and President Donald Trump to agree to a spending bill by midnight Saturday resulted in a partial U.S. government shutdown.

Meanwhile, reports that President Trump suggested firing Federal Reserve Chair Jerome Powell, a move that could roil already volatile financial markets, will also be in focus.

Last week, the U.S. central bank lifted rates for the fourth time this year and kept most of its guidance for additional hikes over the next two years, dashing investor hopes for a more dovish policy outlook.

Elsewhere, on the data front, the U.S. will see a relatively quiet week in terms of economic releases, with reports on consumer confidence and the housing sector expected to draw the most attention.

Trading volumes are expected to remain light during the week due to the Christmas holiday as many traders already closed books before the end of the year.

The dollar surged against its rivals on Friday to move away from a one-month low, as traders mulled over the prospect of a U.S. government shutdown.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, ended the day 0.79% higher at 96.48. It sank to 95.63 on Thursday, a level not seen since Nov. 7.

Despite Friday’s gains, the greenback still ended the week down about 1% as a bevy of mostly negative U.S. data fueled some concerns about economic growth.

The safe-haven Japanese yen benefited from the brittle sentiment, with USD/JPYlosing 1.9% this week, the largest weekly decline since mid-February.

Ahead of the coming week, has compiled a list of significant events likely to affect the markets.

Monday, December 24

U.S. stock and bond markets will see an abbreviated session, with equity markets ending at 1:00PM ET (18:00 GMT), while bond markets are set for a 2PM ET (19:00 GMT) close.

Tuesday, December 25

Markets stateside will remain closed for Christmas.

Wednesday, December 26

The U.S. will release the latest report on home prices from S&P/Case-Shiller.

Thursday, December 27

The U.S. will publish data on CB consumer confidence, weekly jobless claims and new home sales.

Friday, December 28

The U.S. is to round up the week with data on pending home sales, wholesale inventories, the trade deficit and manufacturing activity in the Chicago-region.

— Reuters contributed to this report

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