Category: US Dollar Forecast

Forex Weekly Outlook November 24-28



The dollar strengthened quite nicely, with the exception of the loonie, as the US economy and the Fed remain firmly on track. Euro-zone inflation data, US, UK and Canadian GDP data, US Durable Goods Orders,  and housing data are the most important economic releases in the last week of the month. Here is an outlook on the highlights coming our way.

The FOMC Meeting Minutes release showed that while the Fed is concerned with low inflation expectations and was united around leaving the “considerable time” phrase regarding rates unchanged, global economic issues such as the weakening in Europe, China and Japan are seen to have a limited impact on the US. Most indicators in the US were quite upbeat: inflation firmed more than expected, and so did existing home sales, building permits and the Philly Fed Index. Japan unexpectedly fell into a recession after contracting in Q3, and the country is going to the polls in December. The yen reached new lows. In the euro-zone, Draghi maintained the dovish tone and mentioned outright QE. His comments weighed on the euro, as did weak PMIs. The pound received good news from stronger than expected inflation and retail sales, as well as a more hawkish stance from the BOE. Inflation was also upbeat in Canada, and the Aussie got a boost from a rate cut in China but still remained down on the week. What’s next for currencies?

Updates:
  1. German Ifo Business Climate: Monday, 9:00. German business sentiment declined for the sixth month in October, reaching 103.2 after September’s reading of 104.7. Economists expected a smaller decline to 104.6. Growth in the third quarter was worse than expected with a predicted gain of 0.3%. The survey revealed a drop in current conditions to 108.4 from 110.5 in September and the outlook gauge declined to 98.3 from 99.2. Analysts predict business climate will reach 103 in November.
  2. Haruhiko Kuroda speaks: Tuesday, 0:00, 4:45. BOE Governor Haruhiko Kuroda will speak in Nagoya and in Tokyo. Kuroda warned inflation could fall below 1% the disappointing GDP release in November showing the economy slid into recession. BOE Governor started to implement the unprecedented asset purchases decided in the last policy meeting, despite Prime Minister Shinzo Abe’s decision to delay a sales-tax increase. Kuroda may provide clues on further easing measures to boost inflation towards the 2% target.
  3. US GDP data: Tuesday, 13:30. The first release of US GDP showed an annualized growth rate of 3.5%, which was above expectations. While it came on top of a gain in government spending, it sill showed that the economy is growing at an above-average rate. Economists expect GDP to be revised down to 3.3%.
  4. US CB Consumer Confidence: Tuesday, 13:30. U.S. consumer confidence jumped up strongly in October, hitting a seven-year high of 94.5 from 89 in the previous month amid a further improvement in the Job market raising expectations for higher economic growth. In light of falling gas prices and better job figures, consumer spending is expected to rise in the coming months. U.S. consumer sentiment is predicted to rise to 95.9 this month.
  5. UK GDP data: Wednesday, 9:30. According to the initial release, the pace of quarterly growth slowed down to 0.7% in Q3, after reaching 0.9% in Q2. Economists expect the Ukraine crisis will have negative bearings on the manufacturing sector due to a reduction in foreign demand. However once tensions ease, business confidence and investment will rebound across Europe, and the UK will return to full growth. The third quarter growth rate is expected to be confirmed in the second release at 0.7%.
  6. US Durable Goods Orders: Wednesday, 13:30. Orders for long lasting goods fell unexpectedly by 1.3% in September, while expected to gain 0.4%. Excluding transportation orders, durable goods orders declined 0.2% and fell 1.5% excluding defense orders. Nondefense new orders for capital goods in September fell 5.4%, while defense new orders for capital goods rose 7.4%. However, the general trend is positive showing a stronger market demand, while aircraft orders tend to be less trustworthy. Analysts expect a decline of 0.4% in Durable Goods Orders and a 0.5% gain in core orders.
  7. US Unemployment Claims: Thursday, 13:30. The number of Americans filing claims for unemployment benefits fell last week to 291,000 from 293,000 in the week before. Economists expected a sharper decline to 286,000. The reading continues to suggest an ongoing improvement in the US labor market. The four-week moving average, a more stable gauge, increased 1,750 to 287,500, still showing job growth. Economists forecast 287,000 new claim this week.
  8. US New Home Sales: Wednesday, 15:00. Sales of new U.S. single-family homes reached a six-year high in September, rising to a seasonally adjusted annual rate of 467,000. Economists expected an even higher reading of 473,000. August’s reading was sharply revised for the worse to 466,000, indicating the housing recovery remains uncertain. The housing market regained momentum after stalling in the second half of 2013 when mortgage rates soared. Mortgage rates have declined hand in hand with the contraction in the U.S. Treasury debt yields, but slow wage growth weighs on the pace of recovery. Analysts expect new home sales to reach 471,000.
  9. Euro-zone inflation data: Friday, 10:00. Inflation in the euro-zone is very low and has remained at low levels for a long time, triggering quite a lot of action from the ECB. The preliminary numbers for November are expected to show a drop in headline inflation, from 0.4% to 0.3%, partly due to the fall in oil prices. Core inflation is predicted to remain at 0.7% for another week in a row.
  10. Canadian GDP: Friday, 13:30.  Canada’s economy contracted unexpectedly 0.1% in August, declining for the first time in eight months, amid a decline in energy and manufacturing activity. Economists expected a flat reading as in the previous month. The disappointing figure suggests pickup has stalled in the third quarter. Manufacturing output fell 1.2%, reversing the 1.2% gain in the prior month. Service industries gained 0.2% for the month, with wholesale trade gaining 0.5% and the finance and real estate sectors both rising 0.3% in August. Retail activity, however, declined 0.1% and transportation and warehouses dropped 0.3%. Economists forecast a 0.4% gain in September.

That’s it for the major events this week. Stay tuned for coverage on specific currencies

*All times are GMT.

In our latest podcast, we talk about the state of US housing, run down the FOMC minutes, the Japanese jump, the Draghi drama and also talk oil:

[audio mp3="http://www.podtrac.com/pts/redirect.mp3/www.forexcrunch.com/wp-content/uploads/2014/11/Market-Movers-November-21.mp3"][/audio]

Download it directly here.

Further reading:

Forex Weekly Outlook Nov. 17-21

Forex Weekly Outlook Nov. 17-21

The US dollar had a mixed week, ending higher against the yen and the pound while retreating against the euro and mostly against commodity currencies. Mario Draghi’s speeches, UK inflation data, rate decisions in Japan, and the FOMC Meeting Minutes, as well as inflation and employment data. These are the major events on FX calendar. Here

Forex Weekly Outlook November 10-14

Forex Weekly Outlook November 10-14

The US dollar continued raging across the board, reaching multi-year highs against many currencies. Are we set for another correction like in October or can we expect another advance of the greenback. The UK inflation report, retail sales and consumer confidence in the US and German GDP figures are the major market movers for this week. Here

Forex Weekly Outlook November 3-7

Forex Weekly Outlook November 3-7

It was quite an end to the month, with the dollar strengthening against most currencies, and especially against the plunging yen. And it is about to get busier with rate decisions in Australia, the UK and the euro-zone, employment figures from New Zealand, Australia, Canada as well as the buildup to the all-important NFP report. These

Forex Weekly Outlook October 27-31

Forex Weekly Outlook October 27-31

Currencies were mixed in the past week, with the greenback gaining against the euro and the yen, while sliding against the the Aussie and the loonie. The Fed decision is the highlight of the week, alongside Yellen’s speech, GDP in the US and Canada and two additional rate decision. These are a few of the events

Forex Weekly Outlook October 20-24

Forex Weekly Outlook October 20-24

The US dollar was on the back foot against most currencies as volatility spiked and big moves provided opportunity and risk. US housing and inflation data, A rate decision in Canada and UK GDP are the lead events on our FX calendar. Here is an outlook on the major events for this week. Weak US retail

Forex Weekly Outlook October 13-17

Forex Weekly Outlook October 13-17

The US dollar took a hit, finally correcting its gains, but it didn’t fall too far. UK inflation data, Mario Draghi and Janet Yellen’s speeches, US Retail sales are the major events on our calendar for this week. Here is an outlook on the main market movers coming our way. Despite continuous positive US data, the

Forex Weekly Outlook October 6-10

Forex Weekly Outlook October 6-10

The US dollar did experience a correction, but this did not last too long and it eventually ended the first week of Q4 with gains across the board. Rate decisions in Japan and the UK, employment data in Australia and Canada and the FOMC Meeting Minutes are the major market movers on FX calendar week. Here is an

Forex Weekly Outlook Sep 29-Oct 3

Forex Weekly Outlook Sep 29-Oct 3

The US dollar had another superb week, crushing its peers. A rate decision in the euro-zone, US Consumer confidence, ISM Manufacturing PMI and of course the all-important NFP report are among the top tier events that await us as we enter a new quarter. These are the major events on Forex calendar. Here is an outlook

Forex Weekly Outlook Sep. 22-26

Forex Weekly Outlook Sep. 22-26

The dollar had another positive week, advancing against most currencies on the background of the the FOMC meeting. The upcoming week features Mario Draghi’s speech, German Ifo Business Climate, US New Home Sales, US Durable Goods Orders, among other events. Here is an outlook on the major events coming our way. The FOMC left its