American Prelim GDP, US FOMC Meeting Minutes and US Unemployment Claims are the highlight of this week. Here is an outlook on the market-moving events shaping forex trading.
Last week, European Central Bank President Jean- Claude Trichet signaled to Ireland and Greece to stop relaying on ECB Support and ask for an international bailout. Irish central bank Governor Patrick Honohan said on Nov 18 that an agreement may amount to “tens of billions” of euros. Ireland’s troubles following Greece’s finances crisis earlier this year, contrast with the strength of economic growth in Germany. The EBC uncomfortable role is to balance between struggling and wealthy nations without damaging growth. Will the ECB succeed it its endeavors? Let’s start:
- Canadian inflation data: Tuesday, 12:00. Canada’s CPI rose by 0.2% following a drop of 0.1%. Core rate excluding volatile items such as gasoline grew slower to 0.2% from 0.1%. Bank of Canada Governor Mark Carney said Core rates will remain below 2% until the fourth quarter of 2012 indicating a steady market. CPI is expected to remain 0.1% while the Core CPI is predicted a smaller gain of 0.1%.
- American Prelim GDP: Tuesday, 13:30. The economic recovery in the U.S. slowed down in the second quarter more than previously expected. US economy grew at a 1.6% annual pace revised to 2.0%. Another rise to 2.4% is expected now. Federal Reserve Chairman Ben S. Bernanke anticipates real growth on 2011.
- US Existing Home Sales: Tuesday, 15:00. Existing home sales rose 10% to an annual pace of 4.53M from 4.12M in August due to cheaper borrowing costs. Low mortgage rates and cheaper homes attract buyers and help stabilize this recession stricken industry. Nevertheless the housing recovery will be slowed by grim unemployment forecast and foreclosures that add to the inventory of unsold homes. A reduction to 4.51M is predicted now.
- US FOMC Meeting Minutes: Tuesday, 19:00. Last week, Federal Reserve Governor Kevin Warsh disputed the Fed’s $600 billion Treasury purchases decision claiming it may cause rapid inflation, fail to promote growth and delay any plans to reduce U.S. deficit. It may not be right for the Fed to purchase the entire $600 billion amount of securities. Dallas Fed Richard Fisher also criticized this decision saying the Fed is “monetizing” the government’s debt by printing money to finance the shortfall. Chairman Ben S. Bernanke defended the decision, saying Nov. 6 that the “standard considerations suggest that we should be using expansionary monetary policy” and that the move was “nothing extraordinary.” The minutes from this week’s meeting will provide further clues concerning the nature of the dispute.
- Euro-Zone German Ifo Business Climate: Wednesday, 9:00. German business confidence unexpectedly climbed in October to 107.6 from 106.8 in September, the highest level in three and a half years, suggesting a real growth trend. Large volume exports helped economy grow by 2.2 percent in the second quarter, the fastest pace in two decades. As s result the government more than doubled its 2010 growth forecast to 3.4 percent. Another rise to 107.7 is forecasted.
- Britain Revised GDP: Wednesday, 9:30. UK economy grew by 1.2 percent in the second quarter from its preliminary estimate of 1.1 percent due to stronger construction output. This is the highest rise in nine years. A lower rise of 0.8% is anticipated now.
- US Unemployment Claims: Wednesday, 13:30. The number of Americans filing for first-time unemployment benefits rose to 439,000 last week better than 442,000 expected. Initial claims have stayed below the 440,000 level for three of the last four weeks which is encouraging however economists claim the number needs to fall below 400,000, before the unyielding high unemployment rate can decrease significantly. An even lower figure of 434K is predicted now.
- US Core Durable Goods Orders: Wednesday, 13:30. Durable goods orders excluding transportation orders fell 0.8% in September while the overall, durable goods orders rose 3.3%. However the gain occurred in the volatile transportation component gaining 15.7% owed to a surge in activity at commercial aviation giant Boeing. September’s durable goods order presents mixed results. On the one hand, there was some strength in capital goods and manufacturing orders, and if that trend continues, that would bode well for the U.S. economy. On the other hand, there was weakness in fabricated metals, computers/electronic products, and appliances; further, the large rise in aircraft transportation orders clearly is not sustainable and may need additional stimulus. A rise of 0.8% is expected now.
- American New Home Sales: Wednesday, 15:00. Sales of new homes rose 6.6 percent in September to a 307,000 annual rate, when 301,000, was expected. Tough employment situation is preventing Americans from making the commitment to buy, despite declines in borrowing costs and house prices. Banks are inclined to tighten lending rules due to unpaid mortgages, which may depress housing even more. Improvement in Employment will also bring growth to the housing industry. A growth of 312K is expected now.
- All times are GMT.
Further reading:
- For EUR/USD, check out the Euro/Dollar forecast.
- For the Japanese yen, read the USD/JPY forecast.
- For GBP/USD (cable), look into the British Pound forecast.
- For the Australian dollar (Aussie), check out the AUD forecast.
- For the New Zealand dollar (kiwi), read the NZD forecast.
- For USD/CAD (loonie), check out the Canadian dollar forecast.
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