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Majors, US Dollar Forecast

Forex Weekly Outlook October 17-21

The US dollar remained dominant as Fed fears grew. Inflation data in the UK and the US, Employment data in the UK, the US and Australia, rate decisions in Canada and the Eurozone all stand out. These are the top events on forex calendar. Here is an outlook on the market movers of this week.

U.S. retail sales figures rebounded in September, as sales increased 0.6% and core sales gained 0.5%. This release is a good sign that consumers will continue to support economic growth during the second half of the year. Employment conditions and wage growth remained positive supporting consumer’s spending. Meanwhile, U.S. consumer sentiment unexpectedly slumped in October, amid concern over the upcoming presidential election. The University of Michigan’s Consumer Survey declined to 87.9 from 91.2 in September while analysts expected an increase to 91.9. Will this mixed trend continue?  Let’s start

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  1. Mario Draghi speaks: Monday, 17:35. ECB President Mario Draghi will give a talk in Frankfurt. He may provide clues regarding the ECB’s rate decision due in the next few days. Market volatility is expected.
  2. UK Inflation data: Tuesday, 8:30. UK yearly inflation in August remained unchanged from July at 0.6%. Food prices and air fares increased while prices for hotel rooms declined. Economists expected a rise to 0.7%. Retail Prices fell   to 1.8% from 1.9% in July. Prices of finished goods increased 0.8% vs. 0.3% gain in the prior month. Policy officials believe inflation would rise in the coming months passing the 2% BoE’s target by early 2017. UK inflation is expected to climb higher to 0.9% in September.
  3. US Inflation data: Tuesday, 12:30. U.S. consumer prices increased more than expected in August, rising 0.2% compared to a flat reading in July. The rise occurred amid higher healthcare costs. In the 12 months through August, the CPI gained 1.1% after rising 0.8% in July. Core CPI, excluding food and energy costs, edged up 0.3%, the biggest climb since February, after increasing 0.1% in July. Economists expected the CPI to rise 0.1% and the core CPI to gain 0.2%. Economists forecast a 0.3% rise in CPI and a 0.2% gain in core CPI in October.
  4. UK Employment data: Wednesday, 8:30. The claimant count measure of unemployment, edged up 2,400 in August raising concerns that the Brexit vote outcomes are beginning to show. Wage growth has also declined in August and survey evidence of weakening hiring intentions is expected to result in softer jobs growth in the coming months. Meanwhile the unemployment rate remained unchanged at 4.9%. The number of unemployed is expected to grow by 3,400 in September.
  5. US Building permits: Wednesday, 12:30. US building permits fell 0.4% in August to a seasonally adjusted annual level of 1.139 million units. Economists expected permits to reach 1.17 million units. The number of permits in the first eight months of the year declined 0.8% compared with 2015, but single-family permits increased 8.4%, year to date. The number of permits is expected to rise to 1.17 million units this time.
  6. Canadian rate decision: Wednesday, 14:00. Canada’s central bank maintained rates at its September meeting. Following the unexpected strong GDP reading for the first quarter, policy officials said that the positive forces at work in the economy are starting to outweigh those that are negative. The Banks’ decision was in line with market forecast. However, some economists claim that Policymakers are over optimistic about economic growth prospects, expecting the economy will struggle over the rest of this year due to falling business investment and a slower pace of hiring.
  7. US Crude Oil Inventories: Wednesday, 14:30. U.S. Energy Information Administration reported a rise of 4.9 million barrels in stocks during the week ended Oct. 7. However the data was mixed with a drop of 3.7 million barrels for distillates, which include diesel and heating oil, and 1.9 million barrels decline for gasoline. Analysts expected a smaller rise of 0.4% in crude stocks. Despite the rise in stocks, economists noted that crude builds were common this time of year as U.S. refineries headed into maintenance.
  8. Australian employment data: Thursday, 0:30. The unemployment rate in August declined to the lowest level in three years, reaching 5.6%, as fewer people sought jobs. Economists expected The Unemployment rate to remain at 5.7%.  The decline came despite an overall job contraction of 3,900, as a gain of 11,500 full-time workers was offset by a decline in part-time positions. The employment minister, Michaelia Cash, noted that over the past year, jobless rate has declined from 6.1% while adding 180,000 new jobs to the workforce. The Australian employment market is expected to gain 15,200 jobs in September and the unemployment rate is forecasted to rise to 5.7%.
  9. Eurozone rate decision: Thursday, 11:45. ECB left interest rates and monetary policy unchanged in September. President Mario Draghi noted that the negative interest rates imposed on the Eurozone will have a positive effect on the banks asking opposition to be patient. Draghi admitted that the ECB cut its growth forecasts for the coming two years, from 1.7% to 1.6%, saying risks to growth in the euro area are still “tilted to the downside.”. No change is expected now, but we may get some more  details about the next steps in the QE program.
  10. US Philly Fed Manufacturing Index: Thursday, 12:30. Philadelphia region manufacturing index strengthened in September to 12.8  from 2.0 in the previous month. The reading was much higher than the 1.1 forecast. Expectations remained positive with an increasing upward pressure on prices. The new orders index reached 1.4 from -7.2 in August, but there was a decline in the shipments reading, and unfinished orders also remained below zero for the month. Furthermore, there was a sharp decline in inventories. Philadelphia region manufacturing index is expected to decline to 5.2 this time.
  11. US Unemployment Claims; Thursday, 12:30. The number of Americans filing new claims for unemployment benefits remained unchanged from the previous week posting a 43-year low. The positive reading could pave the way for the Federal Reserve to raise interest rates in December. It was the 84th consecutive week that claims remained below the 300,000 threshold, indicating strong labor market conditions. Analysts expected a higher reading of 252,000. The four-week moving average of claims fell 3,500 to 249,250, the lowest level since November 1973. The number of new claims is expected to reach 251,000 this week.

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