Forex Weekly Outlook Aug 29- Sep 2

The US dollar made a big surge very late in the week to emerge as the winner against most currencies. US CB Consumer Confidence, Canadian GDP data, US ISM Manufacturing PMI as well as the all-important NFP on Friday stand out. These are the primary market movers on our weekly outlook. Join us as we explore the highlights of this week.

Last week, Fed Chair Janet Yellen signaled that the odds for a rate hike this year have strengthened, but the timing remained vague. Yellen noted the consumer demand and labor market have improved. According to estimates, the Fed will hike rates next in December, since it is unlikely the move will be made before the US Presidential election in November. Officials expect the Fed will not raise rates as much in the coming years as they did during previous periods of economic growth but Yellen believes  that even if average interest rates remain lower than in the past, the monetary policy will be able to respond efficiently.  Let’s start,

1. US CB Consumer Confidence: Tuesday, 14:00. Consumers were more optimistic than expected in July, as the index hit 97.3. Economists expected a decline to 95.6 in July. June’s consumer moral was revised down to 97.4 from 98. Consumers were upbeat about current business and labor market conditions, suggesting the economy continues to expand at a moderate pace.   Responders were divided on the current conditions index as 28.1%  said that business conditions were good while 19% said conditions were bad. Economists expect consumer moral will reach 97.2 in August.
2. US ADP Non-Farm Employment Change: Wednesday, 12:15. U.S. private sector employment added 179,000 jobs in July according to the ADP National Employment Report. The reading was better than the forecast of 171,000. ADP payrolls were revised up to 176,000 from an initially reported 172,000 rise. The ADP figures precede the U.S. Labor Department’s more wide-ranging non-farm payrolls report, which includes both public and private-sector employment. Estimates for the ADP report are for a 173.000 job gain in August.
3. Canadian GDP: Wednesday, 12:30. Canada’s economy contracted by 0.6% in May, posting the worst GDP reading since March 2009. The sharp decline was a result of wildfires in Alberta and a slowdown in manufacturing in other areas of the country. Production fell by 2.4%, and Utilities dropped  1.8%. Although economists expect this drastic decline was a one-time event, it does suggest the economy is struggling as the adjustment to lower commodity prices continues.  The Canadian economy is projected to grow by 0.5% in June.
4. US Crude Oil Inventories: Wednesday, 14:30. Oil prices declined last week after an unexpected inventory build. Crude inventories rose 2.5 million barrels last week while expected a 500,000 barrels contraction barrels. The inventory buildup is unusual for this time of year where the demand for motor fuels peaks. This awkward situation changes earlier predictions for the rebalancing of supply-demand in the third quarter.
5. US Unemployment Claims: Thursday, 12:30. The number of Americans filing new jobless claims declined last week by 1000, showing the labor market remains healthy.  Economists expected the number of applications would reach 265,000. Claims have remained below 300,000 for 77 straight weeks. That is the longest such stretch since 1973. The four-week moving average of requests, a more stable measure, fell 1,250 to 264,000 last week. The number of people still receiving benefits after an initial week of aid dropped 30,000 to 2.15 million. The number of new claims is expected to be 265,000 this week.
6. US ISM Manufacturing PMI: Thursday, 14:00. US ISM manufacturing index fell moderately to 52.6 in July amid slower employment and delays in delivery times. However, the important factor of new orders remained high at 56.9, indicating future strength for employment. Export orders reached 52.5 showing expansion; the production also remained robust at 55.4. The overall picture shows strength in output and jobs in July. The ISM Manufacturing index is expected to reach 52 this time.
7. US Non-Farm Employment Change and Unemployment rate: Friday, 12:30. Job creation in July topped estimates as the economy expanded by 255,000 positions. The unemployment rate remained steady at 4.9%. The labor force participation rate edged up to 62.8%. Hourly wages also improved, rising by 8 cents or an annualized pace of 2.6%, while the average workweek edged up to 34.5 hours. Economists expected an increase of 180,000 jobs with a decline of the  unemployment rate  to 4.8%.This great report shows the labor market continues to strengthen as domestic demand increases. Economists expect the US economy will gain 186,000 jobs in August, and the Unemployment rate will decline to 4.8%.

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

*All times are GMT.

Further reading:

• For EUR/USD, check out the  Euro to Dollar forecast.
• For the Japanese yen, read the  USD/JPY forecast.
• For GBP/USD (cable), look into the  British Pound forecast.
• For the Australian dollar (Aussie), check out the  AUD to USD forecast.
• For USD/CAD (loonie), check out the  Canadian dollar
• For the Swiss Franc, see the  USD/CHF forecast.