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Majors, US Dollar Forecast

Forex Weekly Outlook May 27-31

The US dollar already reached new highs, but eventually retreated and corrected after two weeks of strong gains. US Consumer Confidence, GDP, employment and housing data are the highlights on out calendar. Here is an outlook on the main market-movers awaiting us this week.

The past week saw wild swings as the markets kept guessing if the Fed will taper or not.  Bernanke’s testimony provided the biggest drama:  the prepared cautious statement sent the dollar lower, only to  make a big surge when he left the door open for reducing QE  later in the year.  USD/JPY was certainly a wild mover, breaking to new multi-year highs only to be  smashed by the Japanese stock market. The Aussie had a roller coaster week, testing yearly lows before  making a kangaroo leap. The euro showed lots of resilience, also thanks to  some positive German data.  Last week US weekly jobless claims fell by 23,000 to 340K beating market projections. To taper or not to taper? This remains an open question.

  1. BOJ Governor Haruhiko Kuroda speaks: Sunday, 4:50, Wednesday 1:00. BOJ Governor Haruhiko Kuroda is scheduled to speak in Tokyo. He may speak about the positive developments in Japan’s economy and may share some important information concerning future monetary policy and interest rates. His wards may cause volatility in the market.
  2. US CB Consumer Confidence: Tuesday, 14:00. U.S. consumer sentiment soared in April to 68.1 from an upwardly revised 6.9 in March, beating predictions for a 60.8 forecast. The rise occurred due to improvement in the short-term economic outlook and income prospects. Nevertheless, consumers remain concerned over the recent payroll tax hike and the $85 billion in automatic government spending cuts. Another rise to 70.4 is expected now.
  3. Canadian rate decision; Wednesday, 14:00. The Bank of Canada cut its economic growth forecasts to 1.5% from 2.0% predicted in January at the last rate decision meeting in April and  was glad to acknowledge signs of a slowdown in the housing market following sharp rises. The bank also maintained its benchmark lending rate unchanged but gave clues for a rate hike in the coming rate decision meeting. No change in rates is forecast. USD/CAD reached new highs in the past week.
  4. US  GDP Thursday, 13:30. The second release of US GDP for Q1 2013 is expected to confirm the first disappointing read: an annual growth rate of 2.5%. The US economy expanded 0.1% in the fourth quarter of 2012 contrary to early estimate of a 0.1% contraction. The reading was still shy of the 3.1% growth registered in the third quarter. The modification was due to higher exports and increased business investment.  
  5. US Unemployment Claims: Thursday, 13:30. The number of Americans applying for  unemployment  benefits dropped by 23,000 last week to 340,000, providing further evidence that the job market is on the right track. The four-week average edged down 500 to 339,500. Since November, employers have hired an average 208,000 jobs a month, up from 138,000 the previous six months.  A small rise to 342,000 is predicted.
  6. US Pending Home Sales: Thursday, 15:00. Contracts to buy previously owned U.S. homes climbed in March by 1.5%, the highest level since April 2010.    The increase was in correlation to the boost in the housing market this year. The reading followed a 1.0% decline in February and was higher than the 1.1% rise forecast by analysts. The housing boost is expected to contribute the economy this year although there have been signs of weakness lately. A further increase of 1.8% is anticipated. New home sales provided a very positive surprise.
  7. Canadian GDP: Friday, 13:30. Canada’s  economy  expanded faster than expected in February, rising by 0.3% following the same expansion rate in the previous month. The reading was stronger than the 0.2% rise predicted due to added strength in potash mining, oil and gas and manufacturing. The manufacturing sector continued to recover with 0.8% growth and  construction  gained 0.2%. A small rise of 0.1% is forecast.

*All times are GMT.

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

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Anat Dror

Anat Dror

Anat Dror Senior Writer I conceptualize, design and create multi-lingual websites. Apart from the technical work, my projects usually consist of writing content for these sites in English, French and Hebrew. In the past, I have built, managed and marketed an e-learning center for language studies, including moderating a live community of students. I've also worked as a community organizer