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The US dollar did experience a correction, but this did not last too long and it eventually ended the first week of Q4 with gains across the board.  Rate decisions in Japan and the UK, employment data in Australia and Canada  and the  FOMC Meeting Minutes are the major market movers on FX calendar week. Here is an outlook on the top events coming our way.

The excellent US Non-Farm Payrolls report was convincing enough to erase the bad impression from August and end the dollar correction: the US gained 248K and revisions added another 69K. This eventually sent the greenback to new highs against quite a few currencies, such as GBP/USD, which lost 1.60. Beforehand, a  streak of unconvincing US figures finally took its toll on the greenback. In the euro-zone,  Mario Draghi made his best effort not to rock the boat, and the euro had a temporary sigh of relief. In Japan, the authorities seem to have too much of yen weakness, at least when USD/JPY hit 110. AUD/USD formed a double bottom but bounced back very nicely before hitting the lowest since 2010. The kiwi suffered from a on two punch from the government and the central bank, and recovered some of its losses. Let’s start:

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  1. Japan rate decision: Monday. The Bank of Japan (BOJ) maintained its monetary policy on its last meeting in September despite signs of weaker growth. The central bank kept its pledge to increase base money by 60-70 trillion yen, mostly in Japanese government bonds. It was suggested to turn the central bank’s 2 percent inflation target a medium-to-long-term goal was denied by an 8-1 vote. The BOJ expects the moderate recovery will continue since domestic demand remains strong. Inflation is improving but is still way behind the 2% inflation target, projected to reach this goal in 2016, rather than next year.
  2. Australian rate decision: Tuesday, 3:30. The RBA kept the cash rate on hold for the thirteenth consecutive month in line with market forecast, amid positive financial conditions. Inflation remains within the Central Bank’s 2-3 per cent target. Volatility in many financial prices remains low. These positive signs suggest the next rate hike will occur only in mid-2015. The number of loan applications in the housing market grew rapidly with a 40% rise in the number of loans for new properties and a 15% increase in construction loans.
  3. US JOLTS Job Openings: Tuesday, 14:00. This measure of jobs is closely watched by the Fed, thus giving it a stronger impact despite the lag in data:  this report refers to August rather than the recent NFP that refers to September.  After 4.67 million in July, a small rise to 4.71 is expected for August.
  4. US FOMC Meeting Minutes: Wednesday, 18:00. In the last meeting, the Fed tapered for the 7th and last time. In that meeting, the board also decided to leave the “considerable time” wording intact, but there were quite a few shifts to the hawkish side, including the dot chart and the guidelines for an exit strategy. With two people dissenting from the decision to the hawkish side, we can certainly expect the meeting minutes to show a more hawkish picture than Chair Yellen portrayed in her press conference.
  5. Australian employment data: Wednesday, 0:30. Australia’s unemployment rate declined to 6.1% in August from a 12-year high of 6.4% in July. This unexpected decline occurred due to a large addition of 121,000 jobs that month after a 4,000 contraction in July. Economists expected the unemployment rate to decline to 6.3 with a job addition of 15,200. The Reserve Bank governor, Glenn Stevens, noted unemployment is still high, but a rate cut is not expected on the coming months. The economy is expected to lose  29,600 jobs while the unemployment rate is expected to rise to 6.2%.
  6. UK rate decision: Thursday, 11:00. The Bank of England has left UK interest rates at a record low of 0.5% in September, leaving  the Bank’s economic stimulus program at £375 billion. Interest rates were unchanged for five years but are expected to rise early next year due to a growth trend in the UK economy. Nevertheless, Bank governor Mark Carney has stated that any rate rises would be small and gradual. Economists believe a rate hike will hurt households and businesses since wage growth is slow.
  7. US Unemployment Claims: Thursday, 12:30. The number of new claims for U.S. unemployment benefits declined by 8,000 last week to a seasonally adjusted 287,000, pushing down the total number of beneficiaries to the lowest level in more than eight years. The four-week average fell 4,250 to 294,750. The upward trend in economic activity means fewer layoffs as employers expect continued economic growth. Based off the four-week average for jobless claims, monthly job growth should be close 250,000. The number of new claims is expected to rise to 291,000.
  8. Mario Draghi speaks: Thursday, 15:00. ECB President Mario Draghi is scheduled to speak at the Brookings Institution, in Washington DC. He may discuss the recently declared ECB bond buying program and his goal to stimulate bank to lend more to European companies and consumers.
  9. Canadian employment data: Friday, 12:30. The Canadian job market contracted by 11,000 positions in August following a 41,700 addition in July, but the unemployment rate remained unchanged at 7%. Economists expected a job growth of 10,000. Declines were registered both full-time and part-time positions. The number of private sector employees decreased in August, while self-employment rose. The Canadian job market is expected to gain 20K jobs  this time, while the unemployment rate is predicted to remain unchanged at 7%.

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

*All times are GMT.

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