Forex Weekly Outlook – August 9-13

The big event this week is the American rate decision, holding expectations for new easing steps – expectations that already hurt the greenback. Apart from this event, we have employment figures in Britain and Australia, European GDP and lots more. Here’s an outlook for the major market moving events in the upcoming week.

Note that at the beginning of the week, the echoes from Friday’s Non-Farm Payrolls will still impact trading, Then, Bernanke will set the tone. Let’s start:

1. Japanese rate decision: Published on Tuesday morning. No one expects the Bank of Japan to raise the Overnight Call Rate, standing at 0.10% for a long time. In these times, the yen is too strong for Japanese policymakers. In the accompanying statement and press conference, they could hint an intervention to weaken the currency, or even act, something they haven’t done for a long time. USD/JPY and the Japanese crosses will rock.
2. US rate decision: Published on Tuesday at 18:15 GMT. Also here, this rate decision is special, and also here, no one expects Ben Bernanke to raise the Federal Funds rate. With signs of a slowdown becoming stronger, the Federal Reserve may declare a new program for buying assets, or printing dollars if you wish. This is what the market expects. If it won’t happen, the dollar will rise strongly, but if the capacity of the program is large, the dollar will fall.
3. British employment data: Published on Wednesday at 8:30 GMT. British employment has been improving very nicely in recent months, and this trend will probably continue.  Claimant Count Change is expected to show a sixth consecutive month of a drop in the number of unemployed people in July. The unemployment rate, for June is expected to remain unchanged at 7.8%.
4. British BOE Inflation Report: Published on Wednesday at 8:30 GMT. This quarterly event always rocks the Pound, especially as the debate about inflation became heated. Mervyn King, that began showing concern from inflation, still refuses to raise the rates. We’ll get a fresh report, and also comments from Kind and possibly other members, in a press conference that relates to this report.
5. US and Canadian Trade Balance: Published on Wednesday at 12:30 GMT. This  simultaneous  release shakes USD/CAD. The US suffers from a high deficit of over 42 billion, while Canada has a small deficit. A return of Canada to a surplus, which is predicted now, will send USD/CAD down.
6. US Federal Budget Balance: Published on Wednesday at 18:00 GMT. Worries about severe debt hurt the dollar. The government’s deficit squeezed in the past month to 68 billion and is expected to stay around these levels. A rise in the deficit to 165 billion, alongside a wide QE program on the previous day, may weigh heavily on the greenback.
7. Australian employment data: Published on Thursday at 1:30 GMT. Australia enjoyed 4 excellent months of growth in jobs (employment change), exceeding expectations each time. This was accompanied by a drop in the unemployment rate, to 5.1%. Good figures are expected again, with a gain of 20,000 jobs and an unchanged unemployment rate. The Aussie should enjoy it to push higher.
8. US Unemployment Claims: Published on Thursday at 12:30 GMT. Last week’s disappointing rise touched the high range of jobless claims. This weekly number, that is a good indicator for the NFP, is expected to drop to around 450K, in the middle of the range, staying too far from 430K, a number it reached only by accident.
9. European GDP: Published on Friday at 6:00 in Germany and at 9:00 GMT for all the continent. The second quarter was quite wild for Europe. At the beginning of May, the debt issues significantly damaged economic growth, but afterwards, things improved. First, we’ll get Germany’s number – the Euro-zone’s locomotive is expected to show more growth – 1.3%. Is this enough to carry the whole continent forward? We’ll get the answer 3 hours later. Flash GDP for the whole continent holds hopes for a 0.7% rise. Note that these figures are the preliminary releases, and not the final ones, but the impact will be strong on the Euro. Reminder: In Q4, the Euro-zone didn’t grow.
10. US CPI: Published on Friday at 12:30 GMT. The double-feature release with retail sales will create high volatility around this time.  A rise in consumer prices is the key for a rate hike. Up to now, both CPI (-0.1% last month) and Core CPI (+0.2%), stayed around zero, and don’t seem to budge. Similar numbers are expected now.
11. US Retail Sales: Published on Friday at 12:30 GMT. Both retail sales and core retail sales dropped last month, triggering the fears of an economic slowdown. Now, both indicators are expected to rise. Only a rise in a scale above 1% will boost the greenback.
12. US Consumer Sentiment: Published on Friday at 13:55 GMT. Completing the picture for the mood of American consumers, the preliminary release of  consumer sentiment from the University of Michigan is expected to recover this time. Last month’s number was very disappointing – a drop from 76 to 67.8 points. A bounce above 70 points is necessary for the dollar.

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

Further reading:

• For EUR/USD, check out  the  Euro/Dollar Forecast.
• For GBP/USD  (cable), look into the  British Pound forecast.
• For the Australian dollar (Aussie), check out the  AUD/USD forecast.
• For the New Zealand dollar (kiwi), read the  NZD/USD forecast.
• For USD/CAD (loonie), check out the  Canadian dollar forecast.

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