Forex Weekly Outlook August 18-22

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The US dollar was able to advance against the major currencies but retreated against commodity currencies in a week that saw some action. US housing and inflation data, Inflation data in the UK, the FOMC Meeting Minutes, and Janet Yellen’s speech are a few of the major events on Forex calendar. Follow along as we explore the Forex market movers for this week.

US retail sales disappointed with a flat reading in July, a poor start to the third quarter, suggesting some loss of momentum. Also jobless claims fell short of predictions with a rise back above 300K and JOLTS job opening were only OK. Will this allow Yellen to continue her dovish stance in Jackson Hole? The pound that was pounded down by Mark Carney. Without wage growth, rates cannot rise fast, and this theme is relevant also for other countries. In Germany, another fall in business confidence is certainly worrying and weaker than expected GDP numbers confirmed the fragile nature of the euro-zone recovery. And in Japan, the fall in GDP has been sharp but there was a sliver lining

Updates:
 

  1. UK Inflation data: Tuesday, 8:30. UK consumer prices edged up 1.9% in June,  amid price rises in food and summer clothes. The reading was higher than the 1.6% climb forecast by analysts and topped May’s 1.5% increase. This rise may prompt the BOE to increase rates sooner than estimated. Inflation is expected to remain tame in the coming months, however, the inflation threat will rise if wages increase. UK consumer prices are expected to reach 1.8% this time.
  2. US Building Permits: Tuesday, 12:20. U.S. housing starts and building permits unexpectedly fell in June, indicating uneven growth in the housing market, following the slowdown in late 2013. Permits declined 4.2% to a 963,000-unit pace in June, while economists expected them to rise to a 1.04-million unit pace. Permits for single-family homes edged up 2.6% to a 631,000 unit-pace, the highest level since November. Permits for multi-family housing plunged 14.9% to a 332,000-unit pace. A rise to on million unit pace is forecasted now.
  3. US Inflation data: Tuesday, 12:30. U.S. consumer prices gained 0.3% in June, following 0.4% increase in May, amid a rise in gasoline prices. The rise was in line with market forecast. On a yearly base CPI edged up 2.1% as in May, indicating inflationary pressures are building up. Fed Chair Janet warned the Fed may raise interest rates sooner than estimated if the job market continued to improve. Meanwhile, core inflation excluding energy prices rose 0.1% after rising 0.3% in May. In the 12 months through June, the core CPI increased 1.9 % after climbing 2.0% in May. Consumer prices are expected to rise 0.1% , while core prices are expected to gain 0.2%.
  4. US FOMC Meeting Minutes: Wednesday, 18:00. In the last meeting in July, the Fed decided to taper bond buys for the sixth time, as expected and sent a mixed message: it show more calm about inflation reaching its target, but did stress that the labor market is underutilized. The minutes will allow a peek into the internal debate and could hint about the next moves of Yellen and her colleagues.
  5. US Unemployment Claims: Thursday, 12:30. The number of Americans applying for U.S. unemployment benefits increased last week to 311,000 from 290,000 in the previous week. Despite the 21,000 climb, jobless claims remain close to pre-recession levels. The four-week average, a less volatile measure, increased 2,000 to 295,750, nearing the averages before the Great Recession in late 2007. The number of jobless claims is expected to grow by 299,000.
  6. US Existing Home Sales: Thursday, 14:00. U.S. existing home sales edged up in June to a seasonally adjusted annualized rate of 5.04 million units, rising 2.6% from May, however still below the 5.16 million-unit rate seen last year. Economists expected a lower figure of 4.98 million units. Inventories remained high and price gains slowed in many parts of the country increasing transactions. Nevertheless, the housing sector remains a concern for the Federal Reserve ever since the rise in mortgage rates in 2013. Existing home sales are expected to reach  5.01 million units.
  7. US Philly Fed Manufacturing Index: Thursday, 14:00. Manufacturing activity in the Philadelphia-region picked up in July to 23.9 points, rising 6.1 points from June. This was the fastest gain in more than three years. Analysts expected the index to drop to15.6 in July. The current new orders component increased 17 points. The current indicators for labor market conditions to improve. Philly Fed Manufacturing Index is expected to reach 20.3.
  8. Janet Yellen speaks: Friday, 14:00. Federal Reserve Chair Janet Yellen will speak to the central bank’s symposium in Jackson Hole, Wyoming. Yellen will deliver a speech titled “Labor Markets.” She will not answer questions from the audience. The Fed’s three-day gathering of central bankers and economists will be titled “Re-evaluating Labor Market Dynamics.” The conference has foreshadowed some of the Fed’s major policy shifts. Market volatility is expected.
  9. Mario Draghi speaks: Friday, 18:30. European Central Bank head Mario Draghi will follow Federal Reserve Chair Janet Yellen’s speech at the Jackson Hole Symposium and talk about employment issues. Market volatility is expected as Draghi might respond to the lack of growth in the euro-zone.

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

*All times are GMT.

More: Market Movers Podcast Episode #11: Japanese economy past and present, Pound round up

Further reading:

Get the 5 most predictable currency pairs

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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

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