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Majors, US Dollar Forecast

Forex Weekly Outlook September 26-30

The Fed came and went and so did the BOJ, leaving a mixed picture after the high tension. Speeches from Yellen and Draghi among others, US Consumer Confidence, Durable Goods orders and GDP data from the US, UK, and Canada, stand out. These are the highlights on forex calendar. Join us as we explore the market movers for this week.

Last week, The Federal Reserve maintained rates on their September meeting held last week but said a rate hike it is likely before the end of 2016. The Central Bank remained confident about economic growth but preferred to delay its rate hike move. Three members opposed the statement. The rate increase is likely to occur at the Dec. 13 and 14 meeting. Policy members also reduced its expectations for economic growth and inflation in 2016.  The BOJ made  little immediate changes to policy, but now targets long-term interests rates instead of fully commiting itself to a speific QE target. Elsewhere, the pound suffered from talk of a Hard Brexit while the euro maintained its frustrating range.  The Aussie recovered against the kiwi.  Let’s start,

  1. German Ifo Business Climate: Monday, 8:00. German business climate declined unexpectedly in August to 106.2 from 108.3 in the prior month, amid concerns over the consequences of Britain’s vote to leave the EU. This was the sharpest decline in more than four years. Despite the words of confidence issued by policy makers, economists are concerned that weaker external demand would downgrade the growth outlook in September. Economists’ forecast German business climate will reach 106.3 in September.
  2. Mario Draghi speaks: Monday, 14:00.   ECB President Mario Draghi will testify before the Committee on Economic and Monetary Affairs of European Parliament, in Brussels.  Draghi may talk about the risks of deflation despite the generous quantitative easing and the negative rates. Market volatility is expected. He may provide more details about how QE will evolve, something he did not do in the post-rate decision presser.
  3. Stephen Poloz speaks: Monday, 23:10. BOC Governor Stephen Poloz will give a talk in Washington DC. In a recent speech Poloz talked about the growing uncertainty on Canada’s economic recovery, contradicting his earlier view in July, when he stated the  economy is expanding  in June by the most in almost three years.
  4. US CB Consumer Confidence: Tuesday, 14:00. Consumers were more optimistic in August as the Consumer confidence index hit 101.1. Analysts expected consumer sentiment to reach 97.2. Furthermore, consumer confidence was revised upwardly 96.7 from 97.3. 30% of responders said business conditions were good in August compared to 27.3% in July. Meanwhile, 18.4% said conditions were bad, unchanged from the month before. However, as more respondents said jobs were abundant, those claiming jobs are “hard to get” also rose. US consumer confidence is expected to reach 98.6 this time.
  5. US Durable Goods Orders: Wednesday, 12:30. The number of new orders for long-lasting manufactured goods increased for a second straight month in July amid rising demand for machinery and other products, suggesting business spending rebounds. Capital goods orders excluding transportation edged up 1.5% after falling 0.4% in the previous month, while overall orders surged 4.4% following a downwardly revised 4.2% in June. That was the first back-to-back increase since January 2015. However, despite the hefty rise, business investment is likely to be lukewarm in the third quarter. Durable orders are expected to decline by 1.0% and core orders are predicted to decrease by 0.5% on August.
  6. US Crude Oil Inventories: Wednesday, 14:30. U.S. crude stocks continued to decline for the third week, falling by 6.2 million barrels contrary to economists’ forecast for a gain of 3.2 million barrels. Following this report, oil prices jumped 3%. Some analysts claim U.S. crude stockpiles are still too high and prices could come under pressure again.
  7. Haruhiko Kuroda speaks: Thursday, 6:35. Bank of Japan Governor Haruhiko Kuroda will speak in Tokyo. Kuroda may talk about readiness to ease monetary policy further if required, in order to meet the 2% inflation target and boost the economy. Market volatility is expected.
  8. US GDP data: Thursday, 12:30. The US suffers from 3 quarters of weak growth, around 1% annualized. According to the second estimate for Q2 2016, the economy grew at annual pace of 1.1%. The final growth rate for the second quarter is expected to be 1.3%, a small upgrade. High hopes for robust Q3 growth are being eroded.
  9. US Unemployment Claims: Thursday, 12:30. The number of Americans filing initial claims for unemployment benefits dropped last week to252,000, reaching the lowest level since April, indicating the employment market remains robust, despite moderate hiring. The reading was better than the 262,000 expected by analysts. The four-week average of claims declined to 258,500 from 260,750 in the prior week. The number of new unemployment claims is expected to be 260,000 this week.
  10. FED Chair Janet Yellen speaks: Thursday, 20:00. Federal Reserve Chair Janet Yellen will give a talk at the Minority Bankers Forum in Kansas City. She may talk about the reasons for maintaining rates in the Fed’s September meeting and may give further hints about the next hike around Christmas. Market volatility is expected.
  11. Canadian GDP data: Friday, 12:30. Canadian GDP  edged up 0.6%  in June, rebounding from the 0.6% decline recorded in the previous month. The reading was better than the 0.4% growth rate forecast. Manufacturing strengthened by 1.6%, but persistent weakness in construction continues to be a source of concern. The services sector remained stable with a 0.2% gain for June, the same rate as for the previous two quarters. The public sector has also advanced 2.2% over the year.

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