Forex Weekly Outlook Sep. 10-14 – Double feature Thursday

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The US Dollar had an exciting week amid lots of data points and trade wars. What’s next? The ECB and the BOE provide a double-feature Thursday and there are additional events to watch out for. Here are the highlights for the next week.

The world was waiting for news regarding new US tariffs on China and that soured the mood. While the US did not officially announce the implementation of the tariffs on $200 billion worth of Chinese goods, Trump said that duties on an additional $267 billion are already in the works. US data was OK with the NFP not only resulting in better job growth, 201K but also a boost in wages: 0.4% m/m and 2.9% y/y. Emerging markets did not get worse there were no imminent solutions to the problems in Argentina and Turkey. Brexit headlines initially sent the Pound down then triggered a rally on a report that the UK and Germany decided to abandon key demands. A denial limited the rises and the saga continues.

Updates:
  1. UK GDP: Monday, 8:30. This will be the second monthly GDP report and the first one that stands on its own, without an accompanying quarterly figure. The economy grew by 0.1% in June and now we will get the first read for Q3, beginning with July. It will be interesting to see if concerns about a no-deal Brexit have already impacted economic activity. A monthly increase of 0.2% is on the cards.
  2. UK jobs report: Tuesday, 8:30. The labor market is looking good with only 4% unemployment in June. However, wages are not going very fast, with an increase of 2.4% that month, hardly keeping up with inflation. An increase of 2.5% is on the cards now. Changes in salaries are closely watched by the Bank of England. The unemployment rate is expected to remain unchanged at 4%. Jobless claims rose by 6.2K in July, worse than had been expected. We will now get an update for the Claimant Count Change for August and expectations stand at 3.6K.
  3. US PPI: Wednesday, 12:30. The Producer Price Index slowed down in July after a few months of quicker increases. Headline PPI remained flat while Core PPI advanced by only 0.1% m/m. The figures for August will serve as a warm up to the more important CPI coming out on the following day. Both the headline and the core numbers are forecast to advance by 0.2%.
  4. Australian jobs report: Thursday, 1:30. The Australian job market disappointed in July with a loss of 3,900 positions. The unemployment remained low at 5.3%. The report for August may see an uptick in jobs. The Aussie dollar suffered quite a bit of late and an upbeat labor market can help it recover. The number of positions is expected to rise by 18.4K and the jobless rate is not expected to move from 5.3%.
  5. UK rate decision: Thursday, 11:00. The Bank of England increased the interest rate to 0.75% back in August, in a decision that was accompanied by the Quarterly Inflation Report. The BOE responded to rising inflation but despite a unanimous vote to move rates, Governor Mark Carney and his colleagues remain hesitant given the high level of uncertainty originating from Brexit. The MPC is likely to maintain interest rates unchanged at this meeting and probably the next ones until there is some clarity on Brexit or a significant change in the economic trajectory. The vote will likely be unanimous once again. Any votes for an additional hike could boost the pound.
  6. Euro-zone rate decision: Thursday, the decision at 11:45, press conference by President Mario Draghi at 12:30. The European Central Bank reduces its bond-buying scheme at the end of the month to €15 billion from €30 billion so far. It intends to end purchases at the end of the year. Draghi and co. are unlikely to make any announcements. However, the recent drop in inflation and trade concerns may push them to paint a more dovish picture. In addition to the tone of the presser, the ECB releases new staff forecasts in this meeting. Any upgrade or downgrade of inflation and growth forecasts may be indicative of the next moves by the central bank. No big changes are on the cards. If Draghi says that downside risks have increased, it could be more meaningful.
  7. US inflation: Thursday, 12:30. US core inflation reached a high of 2.4% y/y in July, supporting the case for a rate hike. On a monthly basis, prices increased by 0.2% in both the headline and the core figures. Headline inflation is expected to rise by 0.3% while core CPI carries expectations for +0.2%.
  8. US retail sales: Friday, 12:30. The US consumer has been out and about in July. The total volume of sales rose by 0.5% and core sales advanced by 0.6%. Despite some downward revisions, the overall picture looks quite upbeat. Further increases are on the cards for August, but a slower pace may be seen. The data feed into GDP calculations and have a significant impact. Headline sales are predicted to rise by 0.4% and core sales by 0.5%.
  9. US consumer sentiment: Friday, 14:00. The University of Michigan’s final consumer sentiment figure for August stood at 95.3 points, lower than in previous months. On the other hand, the parallel CB measure jumped to the highest levels since the year 2000. We will now get the preliminary read by UoM for September. It will be interesting to see if the trade wars have already had an effect on the American consumer. Higher prices may hurt confidence. A level of 96.9 is on the cards.

*All times are GMT

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Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.