Forex Weekly Outlook Nov. 16-20 – US dollar improves, inflation eyed

The US dollar rebounded after getting walloped a week earlier, courtesy of the US election. Inflation numbers will be in focus this week, with key releases in the UK, the eurozone and Canada.

Eurozone GDP bounced back in Q3 with a gain of 12.6%, after coming in at -12.1%. German CPI posted a small gain of 0.1% in October, ending three straight declines. The week ended on a positive note.

In the UK, employment numbers were stronger than expected. Wage growth jumped 1.3%, up from 0.0% beforehand. It was the strongest reading since March. Unemployment claims fell by 29.8 thousand, the first decline in four months. However, the unemployment rate rose from 4.5% to 4.8%. Apprehension over Brexit remains high, as it’s unclear if the sides will reach an agreement before the December 31st deadline.

1. ECB Financial Stability Review:  Monday, 9:00. This report, which is released twice a year, provides details about the stability of the financial system. Investors will be looking for any hints regarding future monetary policy.
2. RBA Monetary Policy Meeting Minutes:  Tuesday, 00:30. The RBA minutes will provide details of the RBA meeting earlier in November. At the meeting, policymakers held rates at 0.10%, a record low.
3. UK Inflation Report: Wednesday, 7:00. CPI accelerated to 0.5% in September, up from 0.2% beforehand. The estimate for October stands at 0.5%. Core CPI jumped from 0.9% to 1.3% in September, matching the forecast. The forecast remains at 1.3%.  
4. UK Inflation Report Hearings: Wednesday, Tentative. Bank of England Governor Andrew Bailey and several of his colleagues will appear before a committee in parliament to discuss the latest developments. They will have the opportunity to discuss future rate moves and also respond to the latest economic figures. Brexit, which is going down to the wire, will be a crucial topic in the hearings.
5. Eurozone Inflation Report:  Wednesday, 10:00. Inflation remains low in the eurozone, reflective of weak economic conditions. The headline figure came in at -0.3% in September, a second straight decline. Another contraction is projected for October, with an estimate of 0.3%. Core CPI is estimated at 0.2%. Both readings are expected to confirm the initial reads from earlier in the month.
6. Canada Inflation Report: Wednesday, 13:30. Inflation remains at very low levels, reflective of subdued economic activity. The headline reading has not posted a gain in four months. Trimmed CPI, which excludes the most volatile items in the headline release, edged up to 1.8% in September. We now await the October releases.
7. US Retail Sales: Thursday, 13:30. Retail sales is the primary gauge of consumer spending, a key driver of the economy. In September, the headline reading rose to 1.9% and the core reading climbed to 1.5%. The headline figure is expected to slow to 0.5% and the core reading to 0.6%.