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Majors, US Dollar Forecast

Forex Weekly Outlook Sep. 21-25

The dollar received a blow from the dovish Fed, but partially recovered. Apart from echoes from that all important decision, we have elections in Greece, Mario Draghi’s speech, US Durable goods orders, unemployment claims, GDP data and Janet Yellen’s speech. These are the main events for this week. Join us as we explore the market movers on Forex calendar.

The U.S. Federal Reserve decided to keep interest rates unchanged, amid concerns over the global economy, market instability and muted inflation in the US. Despite the dovish tone, the Fed left the door open for a rate hike later this year. Furthermore, FOMC Economic Projections released at the same time, showed 13 of 17 policymakers expected a rate hike this year, down from 15 at the last meeting in June. Will we still see a rate hike this year? The Fed’s worries probably cause worries for others as well, and we may see a dovish reaction from other central banks.  Let’s start:

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  1. Greek Parliamentary Election: Sunday. Former prime minister Alexis Tsipras resigned after seven months of his four-year term, following a strong protest from Syriza hardliners over the third bailout deal with Greece’s creditors, despite his announcement to end austerity. Tsipras announced a snap general election in hope of renewing his vote of confidence. The rebelling members formed a new party, Popular Unity, advocating Greece’s exit from Europe’s joint currency, but a recent poll shows the new party will not be able to get into Parliament. Syriza still leads the race, followed by the center-right New Democracy party. An absolute majority for either parties will be euro positive, while a hung parliament is euro negative.
  2. Chinese  Caixin Flash Manufacturing PMI: Wednesday, 1:45. This independent and forward looking measure of the Chinese economy is very important for the world, especially as Yellen put an emphasis on the slowdown of the Chinese economy. After a final read of 47.3 points in August, the preliminary number for September is  expected to tick up to 47.6, meaning it still remains in contraction territory, below the 50 point mark.
  3. Mario Draghi speaks: Wednesday, 13:00. ECB President Mario Draghi will speak before the European Parliament’s Economic and Monetary Committee, in Brussels. After The European Central Bank cut its inflation and growth forecasts for 2015 and the following two years Draghi hinted that another QE could be implemented to stimulate economic activity if necessary. He also admitted that inflation could turn negative in the near future. Market volatility is expected.
  4. German Ifo Business Climate: Thursday, 8:00. German business Sentiment improved in August to 108.3 from 108 in July, following a positive manufacturing data release. Economy shows continuous growth in Q2 with a 0.4% gain, following 0.3% expansion in the January-March period. Responders were more positive regarding the current situation. However, the companies were somewhat less optimistic regarding future business. Business confidence is expected to decline to 107.8 in September.
  5. US Durable Goods Orders: Thursday, 12:30.  Orders for long-lasting manufactured goods continued to improve in July, rising for the second consecutive month. New orders edged up by 2.0%, to $241.1 billion in July, following a 4.1% gain in June. Economists expected a fall of 0.4% in orders. Meanwhile, Orders for manufactured goods, excluding transportation sector, gained 0.6% to $158 billion in July, after a downwardly revised increase of 0.6% in June. This positive release suggests continued growth in Q3. Durable goods orders is expected to contract 2.0%, while core orders are expected to gain 0.2%.
  6. US Unemployment Claims: Thursday, 12:30. The number of Americans filing initial claims for unemployment assistance fell unexpectedly last week by 11,000 to 264,000, indicating continued growth in the US labor market. The four-week moving average  declined to 272,500 from 275,250 in the previous week. Continuing jobless claims  dropped to 2.237 million from 2.263 million in the preceding week.  The number of claims is forecasted to reach 268,000 this week.
  7. Janet Yellen speaks: Thursday, 21:00. Federal Reserve Chair Janet Yellen speaks at the University of Massachusetts. She may refer to the Federal Reserve’s decision to maintain rates and talk about a new timetable for the long awaited rate hike. Market volatility is expected as always. Yellen has kept quiet in the two months preceding the decision, but certainly had interesting things to say at the accompanying presser.
  8. US GDP data: Friday, 12:30. The U.S. economy grew by 3.7% in Q2, according to the second publication. This release was a significant improvement in comparison to the initial publication and gave a boost to the greenback. In the third and final release, this figure is expected to be confirmed.

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

*All times are GMT.

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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