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The US dollar enjoyed significant gains against the yen and all commodity currencies, but couldn’t beat the euro and the pound. US housing data, CB Consumer Confidence, Durable Goods Orders are among the main highlights on our calendar. Here is an outlook on the major events for this week.

Last week, the Fed’s meeting minutes leaned to the hawkish side, The members left the notion tapering in December is still possible in case the market continues to improve. Following this release, positive data was released; US job market continued to improve with a better than expected drop in the number of unemployment claims, reaching a seasonally adjusted 323,000 and also retail sales edged up 0.4% beating forecasts of a 0.1% climb. Will these strong readings bring the taper closer? In Europe, rumors of an upcoming negative deposit rate hit the common currency temporarily and they were dismissed quickly. The yen was a big loser across the board. Let’s start,

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  1. US Pending Home Sales: Monday, 15:00. Contracts to purchase existing U.S. homes dropped unexpectedly by 5.6% in September, the biggest decline in three years, following a 1.6% fall in the previous month. Analysts expected the market to rebound with a 0.5% rise. Mortgage rates edged up sharply since May on speculations that the U.S. Federal Reserve would soon begin tapering its stimulus program. This rise hindered plans of further home purchases. A gain of 2.2% is anticipated now.
  2. US Building Permits: Tuesday, 13:30. US privately-owned housing units dropped to a seasonally-adjusted annual rate of 918,000 in August, following a revised rate of 954,000 in July. However on a yearly base, it was 11% higher than in August 2012. Furthermore,  Single-family permits reached 627,000, rising 3.0% above the revised reading in July, suggesting construction activity will continue to increase through year end. The ongoing increase in mortgage rates is the main downside risk for the US housing sector.  A rise tp 0.94 million is expected now.  
  3. US CB Consumer Confidence: Tuesday, 15:00 U.S. consumer confidence fell sharply in October, reaching 71.2, after a revised 80.2 in September amid growing consumer’s pessimism concerning future market conditions. Economists expected a reading of 75.2 in October. Likewise, optimism on current conditions also declined to 70.7 in October from a revised 73.5 in September. Economists believe the Federal Reserve should continue with their bond purchasing until the economy fully recovers. A small rise to 72.2 is forecast.
  4. UK GDP (second release): Wednesday, 9:30. According to the initial release, the economy in the UK grew by a strong 0.8% in the third quarter. The second release is expected to confirm this figure, which supports the pound. This is the third consecutive quarter of expansion.
  5.  US Durable Goods Orders: Wednesday, 13:30. Orders of long-lasting products edged up 3.7% in September due to a surge in volatile aircraft orders. But orders for durable goods excluding transportation items fell 0.1%, suggesting a slowdown in economic activity due to companies’ fear of a possible tapering which would hurt economic growth. Despite the resolution reached in October, many companies were badly affected by the government shutdown. The delay in economic data also influenced durable orders. Durable Goods Orders are expected to decline 1.5%, while core Durable Goods Orders are expected to climb 0.5%.
  6. Mark Carney speaks: Thursday, 11:30. Mark Carney, head of the BOE will speak about the Financial Stability Report, in London. He may talk about new measures to bolster UK economy and about the job market improvement. Market volatility could be expected. Canadian data has been mixed recently.
  7. US Unemployment Claims: Thursday, 13:30. The number of Americans applying for initial unemployment benefits plunged by 21,000 to a seasonally adjusted 323,000 last week, the lowest reading since late September indicating the US job market is rebounding. The four-week average fell for the third straight week to 338,500. Both readings are in accordance with prerecession levels. Job growth accelerated over the summer and is expected to continue its expansion in the next months. A further decline to 331,000 is projected.
  8. Canadian GDP: Friday, 13:30. The Canadian economy expanded 0.3% in August thanks to the prosperous oil and gas industry. This growth topped market forecasts of a 0.2% climb, but despite the rise in August and the 0.6% gain in July, analysts still believe growth will remain tame in the coming months. The Bank of Canada lowered its forecast for third-quarter growth to 1.8%, annualized, from 3.8% but economists believe the final reading will be closer to 2.5%. Canadian economy is expected to expand 0.1% this time.

*All times are GMT.

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

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