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The US dollar retreated after two strong weeks. Some optimism about global growth (thanks to the NFP) and some new hope for Europe lowered the attraction for the safe haven dollar and yen. ECB President Mario Draghi’ speech, US Federal Budget Balance, Trade Balance and PPI   are among the highlights of the week. Here is an outlook on the main market movers coming our way.

The US gained 114K jobs in September   in line with expectations following an upwardly revised reading of 142,000 jobs in August, suggesting a modest growth in the job market. The real surprise was the sharp decline in unemployment rate dropping to a near four year low of 7.8%, though mainly attributed to seasonable adjustments. Will the recent figures support Obama in his campaign? How will this impact the US dollar? Let’s Start

  1. Mario Draghi speaks: Tuesday, 7:30. Mario Draghi,  president of the ECB is scheduled to speak before the Committee on Economic and Monetary Affairs of the European Parliament, in Brussels. His words will cause volatility in the market. Draghi might release more comments concerning Spain, after he clarified that the OMT is ready for immediate use.
  2. Australian employment data: Thursday, 0:30. Unemployment in Australia dropped in August to 5.1%, beating expectations of a 0.1% rise, while the Australian job market lost 8,800 jobs in the month. This unexpected decline was contrary to analysts predictions of a 5,100 rise. Nevertheless the increase of full-time positions in July spurred the decline in the unemployment rate. The mixed labor market figures suggest that the RBA may cut rates in a few months’ time. An addition of 5,300 jobs is expected with a rise to 5.3% in unemployment rate. The Aussie is under huge pressure of late.
  3. G7 Meetings: Thursday. –  Finance ministers  from 7 the United States, Japan, Canada, Germany ,France, Italy and Britain will meet on October 11 in Tokyo.  Exchange rate  developments is one of the topics be discussed.  Japan’s new finance minister is expected to discuss the yen at the G7 meeting in hope to encourage foreign exchange intervention.
  4. US Trade Balance: Thursday, 12:30. The United States trade deficit expanded to $42 billion in July, amid fewer exports to Europe,India and Brazil that offsetting a sharp drop if oil imports. Analysts expected deficit to widen further to $44.2 billion. The deficit is expected to widen more significantly in light of the global slowdown taking a toll on US exports. A further expansion to a deficit of 43.9 is forecasted.
  5. US Unemployment Claims: Thursday, 12:30. The number of Americans filing initial claims for unemployment benefits increased less than predicted last week, up 4,000 claims to a seasonally adjusted 367,000. Analysts expected claims to reach 371,000. The four-week average was unchanged at 375,000. ADP reported better than expected private sector job gains of 162,000 in September despite the hovering threat of budget cuts probable in 2013. A small drop to 366,000 is anticipated this time.
  6. US Federal Budget Balance: Thursday, 18:00. The US Federal budget  deficit increased by $191 billion in August, beating expectations for a $160.0 billion deficit. The high figure is due to calendar adjustments without which the deficit would have been considerably lower than the $160 billion expected. The end of the US fiscal year is getting closer with an annual deficit of more than $1tn making it the fourth consecutive year deficit crossed the $1tn line. The Federal budget  deficit is expected to drop to $4.0 billion.
  7. US Producer Price Index: Friday, 12:30. The Producer Price Index climbed 1.7% in August, more than the 1.1% rise predicted by analysts, following 0.3% rise in July. The big jump came amid a surge in energy prices. The core PPI increased 0.2%, in line with predictions. A gain of 0.8% is expected now.
  8. US  UoM Consumer Sentiment: Friday, 13:55. The University of Michigan Consumer Sentiment Index final reading for September reached 78.3, below the preliminary level of 79.2. Nevertheless the US consumer sentiment has improved suggesting better market conditions. A small decline to 77.9 is anticipated.

*All times are GMT.

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

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