Forex Weekly Forecast November 14-18 2016

The US dollar emerged as a winner against most currencies following Trump’s shock win of the presidency, in a very turbulent week. Will we get back to normal trading? There are certainly more indicators: GDP data from Japan and Germany, inflation data from the UK and the US, Employment data from the UK and Australia and also Janet Yellen’s testimony. These are the major events on forex calendar. Join us for our weekly outlook on these top events.

Last week Americans elected Donald Trump the 45th  President. Trump’s shock victory overwhelmed markets around the world causing benchmarks to slide in Asia and crushing the Mexican peso and the dollar fell. However, his conciliatory acceptance speech and other reasons led to a big-league turnaround  with the greenback trumping most currencies. Only the pound stood out with gains, remembering its Super Thursday. Let’s start:

1. Japan GDP data: Sunday, 23:50. Japan’s economic growth remained flat on a quarterly basis during the April-June period, missing forecasts.  On an annualized basis, GDP expanded 0.2%, after a sharp drop from the 1.9% spike in the first quarter. Economists had expected a quarterly growth rate of 0.2%. Private consumption increased by 0.2% from 0.6% growth in the first three months of 2016. Meanwhile, private demand contributed 0.3 percentage points to GDP and is expected to expand further in the coming months. |The release came shortly after the government announced a large stimulus package worth $278 billion  in hopes of increasing GDP growth by 1.3%. Japan’s growth in the third quarter is expected to remain at 0.2%.
2. Mario Draghi speaks: Monday, 15:00, ECB President Mario Draghi will speak in Rome and in Frankfurt. He may talk about the ECB’s plans to extend  the bond-purchase program on Dec. 8 in light of Donald Trump’s victory in the US presidential elections. Market volatility is expected. His recent words weighed on the euro.
3. German GDP: Tuesday, 7:00. Germany’s economy expanded 0.4% in the second quarter of 2016, but growth was weaker than the 0.7% gain registered in the first quarter of the year. On a yearly base, growth showed a 3.1% expansion, the fastest growth rate in five years. Strong employment figures and household consumption gave major boost to GDP. Furthermore, inflation also picked up to a six-month high, showing the strongest reading since January 2016. German GDP is expected to rise 0.3% in the third quarter.
4. UK Inflation data: Tuesday, 9:30. UK inflation picked up to the highest rate in nearly two years, rising to 1.0% in September, amid higher prices for clothes, hotel rooms, and petrol. In case inflation overshoots the Central Bank’s target, rising prices may deal a blow for those with low incomes and savers will lose money in real terms. With the fall in the pound, Oil imports are more expensive as well as clothing imports and the soft pound is boosting the tourism industry, fueling a rise in hotel prices. UK inflation is expected to advance further by 1.1% in October.
5. US Retail Sales: Tuesday, 13:30. Retail sales in the U.S. rebounded in September rising 0.6% after a slight fall in August. The price gain occurred at auto dealers and gas stations, indicating consumers continue to keep the economy on a slow but steady growth path. The reading was in line with market forecast. Meanwhile, Core sales excluding automobiles climbed 0.5%, beating estimates of a 0.4% gain. Retail sales are expected to edge up by another 0.6% in October while core sales are expected to increase by 0.5%.
6. UK Employment data: Wednesday, 9:30. The UK number of employed increased less than expected in September, rising by only 700 claims. However,  this come after a big revision in August; from 2,400 to 7,100. The unemployment rate for August remained unchanged at 4.9% as forecasted. Wages increased 2.3%. Excluding bonuses, they have also gained 2.3%. The number of unemployed is expected to rise by 1,900 this time.
7. US PPI: Wednesday, 13:30.  U.S. producer prices gained 0.3% in September after remaining flat in August, as the cost of energy products and a range of other goods increased, supporting views that domestic inflation is on the rise.  In the 12 months through September, the PPI edged up 0.7%, the biggest increase since December 2014. Economists expected a smaller increase of 0.2%. Producer prices are expected to rise by 0.3% in October.
8. US Crude Oil Inventories: Wednesday, 15:30. Crude oil inventories increased 2.4 million barrels in the November 4 week to 485.0 million, following last week’s pick of 14.4 million barrel gain. Refineries accelerated production, operating at 87.1% of their operable capacity, up 1.9% from the previous week. Gasoline production also rose to an average of 10.5 million barrels per day, up from 9.8 million. Total products supplied over the last four weeks averaged about 20.1 million barrels per day, 1.5 percent higher than last year at this time.
9. Australian employment data: Thursday, 0:30. Australia’s employment market contracted 9,800 positions in September; however, the unemployment rate has fallen to 5.6% despite this loss. The participation rate has declined to 64.5%. Full-time positions fell 53,000 while part-time jobs declined 43,200. Economists expected a job gain of 15,200 and unemployment rate to rise to 5.7%. This negative trend has intensified over the past year by an increase in part-time job creation and weakness in full-time jobs which will have a negative effect on wage growth. The employment market is expected to increase by 20,300 new jobs while the unemployment rate is forecast to rise to 5.7%.
10. US Building Permits: Thursday, 13:30. New building permits for private homes in September climbed to an annual rate of 1.1225 million on a seasonally-adjusted basis compared to 1.152 million posted in August. Had expected a smaller figure of   1.165 million. The number of new privately-owned housing starts reached 1.047 million, 9% below the August revised data of 1.15 million. The number of permits for new private homes is expected to register a seasonally-adjusted 1.19 million units.
11. US inflation data: Thursday, 13:30. Consumer prices edged up at the fastest pace in five months, rising 0.3% amid higher energy and shelter prices, indicating inflation is getting close to the Fed’s target. Meanwhile, core CPI inched up 0.1% missing estimates for a 0.2% rise. The readings were broadly in line with a December rate hike. CPI is expected to gain 0.4% in October while the core CPI is forecasted to rise 0.2%.
12. US Philly Fed Manufacturing Index: Thursday, 13:30. Manufacturing activity in the Philadelphia area declined to 9.2 in October from 12.8 in the previous month. However, the details are confident. The new orders index surged to 16.3 in October from 1.4 in the previous month, reaching the highest level since Nov. 2014. The shipments index rose 24 points to 15.3. Economists said that the weighted sum of the components of the Philly Fed index is in good correspondence with the structure of the ISM survey rising to about 53 from 51. Philly Fed manufacturing index  is predicted to register 8.1 in November.
13. US Unemployment Claims: Thursday, 13:30. The number new claims for unemployment benefits fell 11,000 to a seasonally adjusted 254,000 last week. The reading was better than expected indicating the labor market remains on strong footing. It was the 88th consecutive week that claims remained below 300,000, the longest period since 1970. Economists anticipated claims to reach 267,000 in the latest week. The four-week moving average of claims, a more stable measure, rose 1,750 to 259,750 last week. The number of new jobless claims is expected to reach 257,000 this week.
14. Janet Yellen speaks: Thursday, 15:00. Federal Reserve Chair Janet Yellen will testify before the Joint Economic Committee, in Washington DC. She may provide clues regarding the Fed’s rate plans in light of the recent win of the republican candidate Donald Trump. Market volatility is expected.

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

*All times are GMT.

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