The markets had another week of doom and gloom with signs of recession from all over the world. Will Bernanke act? Ben Bernanke’ speech in Jackson Hole, US housing data and US GDP are the highlights of this week. Here is an outlook on the major market-movers ahead.
Last week US inflation is still very present. CPI increased by 0.5% in July, well above expectations of 0.2% gain with core inflation rising by 0.2% in line with predictions indicating healthy market activity with signs of inflation slimming chances for a QE3 announcement in Jackson Hole. Will we see a stop to the slowdown in the US economy?
- Euro-Zone German ZEW Economic Sentiment: Tuesday, 9:00. German analysts’ confidence plunged drastically in July according to the ZEW institute reaching -15.1 from-9.0 in June following the European crisis. Economists predicted a drop to 11.8. A drop to -24.3 points is expected now.
- US New Home Sales: Tuesday, 14:00. New home sales dropped unexpectedly in June to 312,000 from315,000 in May. Analysts expected the figure to rise to 320,000. However prices have come up amid short supply of new houses increasing home values and indicating a start of stability in the housing market. Sales are predicted to tick up to 316K.
- Euro-Zone German Ifo Business Climate: Wednesday, 8:00. German business confidence slid to a nine-month low in July reaching 112.9 following144.5 in June. This slowdown inEurope’s largest economy could be partially explained by the uncertainty around the Greek bailout. Another drop to 111.4 points is expected.
- US Durable Goods Orders: Wednesday, 12:30. New orders for durable U.S. goods rose by 1.9%. A big drop was originally reported. A similar rise of 2.2% is expected. Core orders, which are no less important, rose by 0.4% and are expected to reverse these gains.
- US Unemployment Claims: Thursday, 12:30. Jobless claims edged up to 408,000 last week crossing the 400,000 line and exceeding predictions for 402,000 new claims. The uncertainty in the market induces employers to layoff more workers which further aggravates job market conditions. A small drop to 402K is likely now.
- UK Revised GDP : Friday, 8:30. The British economy expanded 0.5% in the first quarter of 2011 in line with expectations although the retail sector is still weak indicating interest rates would not go up for in the foreseen future. The second quarter already saw a slowdown according to the first release. A confirmation of the 0.2% growth rate is expected now.
- US Prelim GDP: Friday, 12:30. U.S. Gross domestic product increased by only 0.4% in the first quarter of 2011 well below the 3.1% growth in the last quarter of 2010 and the original publications. Also the first release of GDP for Q2 was disappointing at an annual pace of 1.3%. This reading indicates that the US economy is proceeding sluggishly amid a slowdown in consumption. A revision to the downside is widely expected: to growth of only 1.1% in Q1
- Ben Bernanke speaks: Friday, 14:00. Ben Bernanke is now in a tenuous position following the last FOMC vote where 3 out of 10 members opposed his liberal monetary policy of maintaining the extra low rate until mid-2013. He will probably talk about the reason behind this resolution and the possible scenario of QE3. As a threat of deflation was officially the reason for QE2, the chances of QE3 are low as prices are on the rise. But if Bernanke looks to help the stock markets, QE3 is definitely on the agenda.
That’s it for the major events this week. Stay tuned for coverage on specific currencies
*All times are GMT.
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