Forex Weekly Outlook Oct. 12-16 – US dollar loses more ground

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The US dollar had another rough week against the G-10 currencies, as investors remain sour on the greenback. This upcoming week features employment reports and inflation releases.

The European Central Bank released the minutes of the September meeting. Policymakers expressed concern over falling inflation as well as the high value of the euro, saying that the strong euro could hamper inflation and growth. Eurozone and German Manufacturing PMIs improved in September, with readings of 53.7 and 53.6, respectively. The neutral 50-level separates contraction from expansion.

The UK economy expanded by 2.1% in August, missing the estimate of 4.6%. However, the NIESR GDP Estimate showed a sharp gain of 15.2% in September, up from 7.0% in the previous release.

Canada posted excellent employment numbers. Employment Change jumped to 378.2 thousand, up from 245.8 thousand. The unemployment rate fell to 9.0%, down sharply from 10.2%.

The Reserve Bank of Australia maintained rates at 0.25%, where they have been pegged since Mach. However, the bank hinted broadly that it would cut rates at the November meeting.

In the US, The FOMC minutes from the Fed’s September policy meeting expressed concern that the lack of a federal fiscal stimulus package could hinder the US recovery, which members said was moving faster than expected. A stimulus bill has been stuck in Congress and it is unlikely that a deal will be reached before the US election. The US dollar showed little reaction to the minutes, as policymakers did not provide any forward guidance on interest rate hikes.

  1. German Final CPI: Tuesday, 6:00. Inflation has been declining in the eurozone’s largest economy. The August reading came in at -0.1% and another decline is projected for September, with an estimate of -0.2%.
  2. UK Employment Report: Tuesday, 6:00. Unemployment rolls rose by 73.7 thousand in August, lower than the estimate of 99.5 thousand. Will we see an improvement in the September data? Wage growth posted a third straight decline in July, with a reading of -1.0%. The forecast for August stands at -0.6%. The unemployment rate, which rose to 4.1% in July, is expected to climb to 4.3% in September.
  3. Canada ADP Non-Farm Employment Change: Wednesday, 12:30. Canada Employment Change for September sparkled last week, with a read of 378.2 thousand, crushing the estimate of 150.0 thousand. Will the ADP release also point to strength in the labor market? 
  4. Australian Employment Report: Thursday, 00:30. The economy created 111.0 thousand jobs in August, blowing past the estimate of -40.0 thousand. However, the forecast for September stands at -35.0 thousand. The unemployment rate is projected to rise to 7.1% up from 6.8%.
  5. Eurozone Inflation Report: Friday, 9:00. Deflation remains a major concern for ECB policymakers. Inflation declined by 0.2% in August and the markets are braced for a -0.3% reading in September.
  • All times are GMT
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About Author

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.