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The US dollar continued raging across the board,  reaching multi-year highs against many currencies. Are we set for another correction like in October or can we expect another advance of the greenback.  The UK inflation report, retail sales and consumer confidence in the US and German GDP figures are the major market movers for this week. Here is an outlook on the highlight events.

The US gained “only” 214K jobs in October, but revisions and other internal figures made it look better. Other labor measures  such as ADP, jobless claims and PMI employment components all advanced and supported the greenback. In the euro-zone, worries about German opposition to Draghi were demolished with a dovish statement including a unanimous commitment to enlarge the balance sheet towards 2012 levels. This sent EUR/USD down to levels last seen in 2012. In the UK,  the economy is cooling down according to some PMIs and the BOE is still sitting on its hands. Commodity currencies all enjoyed better than expected jobs numbers, especially Canada, but  all  touched new lows. And last but least, the  quick deterioration of the yen continued, with USD/JPY  breaking 115 much earlier than expected, extending the moves ignited by the BOJ. Lots of action. What’s next?

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  1. UK Employment data: Wednesday, 9:30. Britain’s labor market continues to recover at a slower pace. The unemployment rate fell more than expected in the three months to August reaching 6.0%. The number of jobless claims declined by 18,600 in September, following a 37,200 contraction in the previous month. Analysts expected a higher figure of 34,200. Furthermore, wage growth lags behind inflation having negative effects on living standards and job creation posted the weakest rise since the spring of last year. The number of jobless claims in Britain declined by 24,900 in October.
  2. Mark Carney speaks: Wednesday, 10:30. The Inflation Report released in August, the Bank raised its 2014 growth forecast to 3.5% from 3.4% amid continuous improvement in the labor market. However wage growth projections declined 1.25% below inflation levels. Rate hikes are likely to be gradual and limited due to the slowdown in recovery and poor wage growth. BOE Governor Mark Carney will speak about the Inflation Report in London. Carney stated in September that the BoE will start raising rates next spring, if the labor market continues to improve. However in case inflation risks build up, the bank will act to contain excess pressures. Market volatility is expected.
  3. US Unemployment Claims: Thursday, 13:30. The number of Americans filing initial claims for unemployment benefits declined further last week, reaching 278,000 from 288,000 in the prior week. The reading was better than the 285,000 figure forecast  by analysts, indicating the US job market continues to strengthen boosting  consumer confidence. US jobless claims is expected to reach 282,000 this week.
  4. German GDP: Friday, 7:00. The euro-zone’s largest economy contracted by 0.2% in Q2. Hopes are high for a minimal growth rate of 0.1%, thus allowing Germany to avoid a technical recession. However, given  some weak figures, it would not be terribly surprising if we see a second quarter of contraction in Q3.  France releases its GDP data 30 minutes earlier, and also here a growth rate of 0.1% is expected, but the focus is on Germany. The euro-zone as a whole is also expected to experience this 0.1% growth rate.
  5. US Retail sales: Friday, 13:30. Retail sales  declined 0.3% in September amid lower spending after a 0.6% gain in the previous month. Economists projected a minor drop of 0.1%. Sales declined at automobiles, furniture, building-supply outlets and clothing merchants. The lack of substantial wage gains limited consumer spending. The manufacturing sector weakened along with concerns of slower global growth. Meantime, retail sales excluding volatile categories such as food services, auto dealers, home-improvement stores and service stations declined 0.2%, the first drop since January, after increasing 0.4% in the prior month. Economists expected a 0.2% gain. Both retail sales and Core sales are expected to gain 0.2% in October.
  6. US UoM Consumer Sentiment: Friday, 14:55.  U.S. consumer sentiment edged up in October to 86.4, the highest in more than seven years, amid positive response on personal finances and the national economy. This 1.8 point rise was better than the 84.3 forecasted by economists. The survey’s one-year inflation expectation declined to 2.8 from 3.0, while five-to-10-year inflation remained at 2.8. U.S. consumer confidence is expected to increase further to 87.3 this time.

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

*All times are GMT.

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