Forex Weekly Outlook – November 2-6 2009

The first week of November is packed with major events: rate decisions in the US, Britain, Europe and Australia, and many employment figures, with the king of forex, Non-Farm Payrolls, the king of forex, closing the week with the monthly circus. There are lots of other events to open the month. Take a deep breath:

After a week of dollar correction, that also saw some panic, the excellent GDP in the US calmed down traders. Renewed risk appetite weakened the dollar. Apart from the usual economic indicators reviewed here, not the G20 meetings taking place at the weekend.

Monday, November 2nd: Australian HPI is the first noteworthy event of the week. It’s expected to turn positive this time. Also note Australian Commodity Prices which are expected to rise.

In Japan, Average Cash Earnings are expected to drop once again. In Switzerland, the SLVE PMI is predicted above 50 points, and perhaps push the Swissy towards parity.

British Manufacturing PMI is expected to edge up above the 50 mark, showing expansion in Britain’s manufacturing sector. Halifax HPI is expected to rise by 0.8%, half of last month’s rise.

In the US, ISM Manufacturing PMI is predicted to rise to 53.1 points, indicating more expansion. Pending Home Sales aren’t expected to repeat the leap from last month, but are expected to be positive, contrary to last week’s New Home Sales. Both figures are published at the same time.

New Zealand’s Labor Cost Index is expected to rise in the third quarter, but not in a way that would imply a rate hike.

Tuesday, November 3rd: After being the first country to raise the rates, Australia will probably be also the second. Glenn Stevens will probably raise the Cash Rate to 3.5%. AUD/USD will also shake by the RBA Rate Statement, which will hint about future policy.

In Britain, Construction PMI is predicted to edge up, but remain under 50, showing that the rise in house prices doesn’t affect the whole sector. US Factory Orders are expected to rise by 0.8% after falling last month.

Wednesday, November 4th: British Nationwide Consumer Confidence is predicted to edge up, enough time before the MPC meeting, and could impact the rate decision.

A day after the rate decision, Australian Building Approvals are expected to rise nicely, while Retail Sales are only expected to rise by 0.5%. Both figures are published at the same time, moving the Aussie.

In Britain, Services PMI are expected to remain stable, above 50 points, showing that this sector is strong. This should supply fuel to the British Pound.

In the US, ADP Non-Farm Employment Change can give some indication to Friday’s Non-Farm Payrolls. ADP Non-Farm Payrolls are predicted to fall once again, this time by 187K.

Completing Monday’s release, ISM Non-Manufacturing PMI is also expected to edge up to 51.7 points.

The rate decision in the US isn’t expected to bring a rate hike: the Federal Funds Rate is expected to stay at a maximum level of 0.25%. Talks about the recovery, as seen in the great GDP results, will be of interest in the FOMC Statement. Also the bond buying scheme (known as dollar printing) will be important.

In New Zealand, employment figures are expected to be bad, with a drop in the employment of 0.3%, and a rise a jump in the unemployment rate to 6.4%. Contrary to my expectations, there was no rate hike in New Zealand – this hurt the kiwi.

Thursday, November 5th: Australian Trade Balance is expected to show another month of deficit. Then, RBA Governor Glenn Stevens will talk, and might shed some light on future policy. Swiss CPI is predicted to rise by 0.6%.

British Manufacturing Production is expected to rise this time. It’s only a prelude to the rate decision.

The Official Bank Rate in Britain is expected to remain at 0.5%. The more interesting part of the MPC Rate Statement is the Quantitative Easing program, also know as the Asset Purchase Facility. Following last month’s bearish hints by the BoE and the ongoing recession in Britain, the program is expected to grow to 225 billion pounds. The program has run out of money, and new pound printing is probably necessary. GBP/USD might crash.

Jean-Claude Trichet’s ECB isn’t expected to bring any surprises: the European Minimum Bid Rate is expected to stay at 1%. He might refer to the slow recovery in the continent at the ECB Press Conference.

Before the rate decision, European Retail Sales are released, and they’re expected to rise by 0.4%.

In the US, weekly Unemployment Claims are expected to stay rather stable at 519K. In Canada, Ivey PMI is expected to take a break and drop this time. Will the loonie recover from the impact of the rate decision?

Friday, November 6th: Britain’s NIESR GDP Estimate is published early in the day. It proved itself in estimating the ongoing British recession. Later in Britain, PPI Input is expected to turn positive once again.

Canadian employment figures are expected to be stable. The unemployment rate is predicted to remain at 8.4% while 10K jobs are expected to be added. Last time, great employment figures sent the Canadian dollar much higher.

American Non-Farm Payrolls are expected to fall by 171K. This will be an improvement, but will still show job losses in the US. The accompanying figure, the Unemployment Rate, is expected to edge up to 9.9%. A 10% rate or more will have a huge effect on the markets. This is what Obama talked about, but a double digit rate isn’t common in the US, and was last seen 26 years ago. Whatever the results are, the markets will go up and down strongly around the release.

That’s it for the major events this week. I’ll be covering specific currencies in detail, including technical and fundamental analysis. They’ll be published later on. Published.

In the meantime, here’s the overview for this week in forex.

Further reading:

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