Category: US Dollar Forecast

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 on our calendar for this week. Follow along as we explore the Forex market movers.

US data looked quite solid in the past week, with inflation and housing both edging above expectations. Also jobless claims kept up, and there is a growing sense that QE is going to end as planned, defying Bullard’s words in the previous week. In the euro-zone, optimism comes from German data but not from France, and the ECB has also corporate bonds on its agenda. The UK has seen disappointing retail sales and no rush to raise interest rates. Chinese GDP came out above expectations and supported the Aussie, but CPI took it away. The kiwi suffered more from its own CPI, while the loonie got a boost from a mildly more hawkish BOC, in the background of the Ottawa shooting. Where are currencies headed next? Let’s start:

Updates:
  1. German Ifo Business Climate: Monday, 9:00. German business climate index, based on a monthly survey of about 7,000 respondents, declined in September to 104.7 from 106.3 posted in August. Economists expected a higher reading of 105.9. Sentiment worsened across the board amid the prolonged crisis in Ukraine impacting more than 6,000 German firms and the weak recovery in the Eurozone economy. Nevertheless, the German Bundesbank forecast a positive end to the year despite the recent slowdown. German business sentiment is expected to reach 104.6 this time.
  2. US Durable Goods Orders:  Tuesday, 12:30. US durable goods orders plunged in August due to volatility in aircraft orders. Orders dropped 18.2% after a strong rise of 22.6% in July. However the overall growth trend remained strong. Meantime, Core orders excluding transportation advanced by 0.7% in August after a 0.8% decline in the previous month. Core orders reflect the true trend, rising 17.2% in the three months to August. The rise in orders is also reflected by the constant improvement in the US job market with fewer layoffs and increase hiring. Durable goods orders are projected to gain 0.4% , while Core durable goods orders  are expected to increase by 0.5%.
  3. US CB Consumer Confidence: Tuesday, 14:00. U.S. consumer confidence worsened in September, falling to 86 from 93.4 in the prior month. Economists expected a milder decline to 92.2. The strong decline may be explained by less favorable assessments of the current job market condition. Consumers expected economic growth to stall in the following months ahead. The outlook index declined to 83.7 from a revised 93.1 reading, while the present conditions index fell to 89.4 from a revised 93.9.
  4. US FOMC Statement: Wednesday, 18:00. The Fed is expected to remove the doubts and end QE as planned. However, the “considerable time” guidance regarding low rates is expected to stay in the statement. Bullard surprised markets by suggesting that QE could continue. However, there are reasons to believe that QE will end: FOMC doves support the end of QE, all employment data (NFP, JOLTS, jobless claims) look great and inflation is OK. In addition, changing course on a stock market slide could erode the Fed’s credibility. The genuine worries about global growth is likely to result in leaving the “considerable time” phrase. This is likely to change when the global outlook improves, and when the decision is accompanied by a press conference.
  5. NZ rate decision: Wednesday, 20:00. The Reserve Bank of New Zealand kept the official cash rate at 3.5%. Governor Graeme Wheeler stated he won’t rush to raise rates as previously thought, since inflation remains contained. Wheeler also signaled a pause in the bank’s current tightening measures, indicating the bank needs to measure the impact of the four rate hikes this year. The policy statement projects slower inflation by the end of 2015. Rates are expected to remain unchanged at 3.5%.
  6. US GDP data: Thursday, 12:30. The third estimate of real gross domestic product release for the second quarter showed an annual rate expansion of 4.6%, following the previous estimate of 4.2%. The 4.6% growth in real GDP showed growing personal consumption, private inventory investment, exports, as well as local government spending. The gains were partially offset by a rise in imports, and a 0.9% decline in federal government expenditures. Personal consumption increased but the main growth force was fixed business investments expanding 9.7%. The BEA expected second quarter corporate profits increased $164.1 billion, compared to a $201.7 billion decrease in the first quarter. 3.1%. An annual growth rate of 3.1% is expected for Q3.
  7. US Unemployment Claims: Thursday, 12:30. The number of new claims for U.S. unemployment benefits rose by 17,000 last week to 283,000. Despite the rise, the number of claims remained below 300,000 for a sixth straight week, indicating the US job market continues to strengthen in spite of a global slowdown trend. The four-week moving average fell to its lowest level since May 2000. However, the slowdown trend in major countries is starting to impact the US manufacturing sector. The number of jobless claims is expected to decline to 277,000 this time.
  8. Janet Yellen speaks: Thursday, 13:00. Federal Reserve Chair Janet Yellen will speak in Washington DC. Yellen may address the rate hike issue amid continued U.S. economic growth and strengthening in the US labor market. Likewise the Fed Chair may discuss the global slowdown trend which may affect the US economy in the coming months.
  9. Japan rate decision: Friday. The Bank of Japan kept monetary policy unchanged at its October meeting. The Bank also unanimously decided to prolong its money market operations to raise the monetary base to an annual pace of between JPY 60 and 70 trillion and reach a 2.0% inflation rate. The central bank was more pessimistic regarding economic conditions, despite stating that the economy is continuing to recover moderately as a trend.  Regarding global developments, the BOJ sees a downside risk in the pace of recovery in the US and the unclear state of the Eurozone economy.
  10. Canadian GDP: Friday, 12:30. Canada’s economy did now grow in July, from the previous month due to a slowdown in the mining, and oil and gas industries offset by a rise in manufacturing and the public sector. Mining, oil and gas industries contracted by 1.5% in July. Manufacturing expanded by 1% and the public sector by 0.5%. Economists expected a minor growth of 0.2%. This sluggish growth suggests the BOC will be on no hurry to raise rates anytime soon.

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 preview the all important Fed decision, digest China and examine bitcoin against gold:

[audio mp3="http://www.podtrac.com/pts/redirect.mp3/www.forexcrunch.com/wp-content/uploads/2014/10/Market-Movers-October-22.mp3"][/audio]

Download it directly here.

Subscribe to our podcast on iTunes.

Further reading:

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

Forex Weekly Outlook September 15-19

Forex Weekly Outlook September 15-19

The dollar was king once again, but some currencies such as the euro fared better than the commodity currencies. The Fed decision and the Scottish Independence Vote stand out as the key events in a week that also consists of other important releases, and promises to be very interesting. Check out these events on our weekly

Forex Weekly Outlook September 8-12

Forex Weekly Outlook September 8-12

The US dollar had another strong week in currency markets, bowing only to the Aussie, as the euro and the pound were hit hard. Can we expect a correction or continuation now? US retail sales and consumer sentiment, Australian employment data and a rate decision in New Zealand are among the major events on our calendar for

Forex Weekly Outlook September 1-5

Forex Weekly Outlook September 1-5

The euro was the big loser in a week that otherwise saw some profit taking on dollar longs. The first week of September is packed with top tier events as traders return from their vacations. Rate decisions in Australia, Canada, Japan, the UK, and most importantly the euro-zone, and US PMIs leading up to the all-important

Forex Weekly Outlook August 25-29

Forex Weekly Outlook August 25-29

The dollar dominated once again, with multi-month gains against major currencies. Is it time for a correction or will this trend continue? German Ifo Business Climate, US housing data, Durable Goods Orders and GDP are amongthe highlights of this week. Follow along as we explore the Forex market movers coming our way. This was quite