Forex Weekly Outlook October 8-12 – Dollar dominates again

The US Dollar gained some ground against its peers in a turbulent week. What’s next? US inflation stands out in the second week of October which also sees tension rising towards Brexit and the mid-term elections Here are the highlights for the next week.

The greenback kicked off the new quarter with fresh gains. Powell’s hawkish words joined soaring yields and mostly upbeat data. The ISM Non-Manufacturing PMI hit 61.6 points, the highest on record. However, the Non-Farm Payrolls report was mixed with an increase of only 134K jobs. Upwards revisions and OK wages balanced the picture. The Euro suffered the ongoing Italian crisis while the pound struggled with growing concerns about the stability of the British government amid Boris Johnson’s maneuvers and the question of the Irish border. The Canadian Dollar was a big winner after Canada and the US reached a framework on a new NAFTA agreement that will be called USMCA. USD/JPY reached new highs while the Aussie struggled after the RBA decision.

1. UK GDP: Wednesday, 8:30. This is a monthly GDP report for August, which provides more insights into Q3. The UK economy grew by 0.3% in July, the first month of Q3 and growth in August is projected to slow to 0.1%.  Any slowdown may be attributed to worries about Brexit. The UK also publishes Manufacturing Production and the Goods Trade Balance at the same time.
2. US PPI: Wednesday, 12:30. The Producer Price Index disappointed in August with a drop of 0.1% on the headline and 0.1% also on core PPI. The underwhelming  figures came after an extended period in which factory gate advances outpaced expectations. Both headline and Core PPI are expected to advance by 0.2% m/m.
3. ECB Meeting Minutes: Thursday, 11:30. The European Central Bank publishes the internal deliberations from the September meeting. Back then, the ECB made no changes to its policy. However, ECB President Mario Draghi surprised by seeing the glass half full. He is usually dovish. Comments about wages, inflation, and future monetary policy will be watched very closely.
4. US inflation report: Thursday, 12:30. Similar to PPI, also the Consumer Price Index fell short of expectations in August with Core CPI retreating to 2.2% after peaking at 2.4% in July. A monthly increase of 0.2% was seen in the headline monthly number in August while Core CPI advanced by only 0.1%. Core CPI and the headline figure are predicted to advance by 0.2% in the monthly figure.
5. US Consumer Sentiment: Friday, 14:00. The final consumer sentiment measure for September was revised down to 100.1, but this still represents an increase from August. Higher confidence implies increased spending by consumers, but the correlation is not always there. The preliminary numbers for October will likely be upbeat: 100.9 is on the cards.

*All times are GMT

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Further reading:

• EUR/USD forecast – for everything related to the euro.
• GBP/USD forecast – Pound/dollar analysis
• USD/JPY forecast – the outlook for dollar/yen
• AUD/USD forecast – projections for the Aussie dollar.
• USD/CADc forecast – Canadian dollar predictions

Safe trading!