Forex Weekly Outlook – September 13-17

After seeing action in a week that was supposed to be calm and began with a holiday, the calendar is very busy this week, with US inflation figures, retail sales, the Philly index, British employment and lots more. Here’s an outlook for the 14 major market moving events that will shape forex trading this week.

The big surprise in the past week was the grand return of the European debt problems. It began with an article that recycled old news, continued with a troubled Irish bank and continued with the notion that the austerity measures will take their toll. These will probably accompany us in the upcoming week, as well as the influx of indicators:

1. US Federal Budget Balance: Published Monday, 18:00. The US government has a big deficit. This is no secret. A high deficit of 165 billion was recorded last month, causing worries. This time, the deficit is expected to squeeze to 109 billion.
2. British CPI: Published Tuesday, 8:30. Contrary to the US and European countries, Britain saw the annual rate of inflation rise above the 3% target. Calls for a rate hike from MPC member Andrew Sentance were rejected by Mervyn King, governor of the BoE, which saw inflation returning to target. Indeed, CPI dropped gradually to 3.1% and is now expected to complete the move and dip to an annual rate of 2.9%. This is expected to weaken the Pound.
3. German ZEW Economic Sentiment: Published Tuesday, 9:00. This wide survey  always rocks the Euro. In the past four months, it posted significant drops, short of  expectations, reaching 14 points last month, still in positive territory, meaning small economic optimism. Another drop is expected now to 11.3 points. A drop to negative territory will weaken the Euro significantly.
4. US Retail Sales: Published Tuesday, 12:30. This major consumer gauge recovered last month after terrible falls beforehand. Retail sales are predicted to rise by 0.4%, exactly like last month, and core retail sales will probably rise by 0.3%, slightly better than last month’s 0.2% rise. Any result will rock the markets.
5. British Employment data: Published Wednesday, 8:30. After a  few excellent months, the Claimant Count Change indicator, which measures the change in the number of unemployed Brits, dropped by only 3800 people, sending the Pound down. The fresh figure, for the month of August, will probably be better – a drop of 5100 people. The unemployment rate is expected to remain at 7.8% for a third month in a row. Note that the figure is for July, thus having less impact.
6. US Industrial Production: Published Wednesday, 13:15. Industrial output in the US exceeded economists’ pessimistic expectations in the past  month, especially last time – a rise of 1%, double the expectations. A more modest rise is expected now – 0.4%.
7. New Zealand rate decision: Published Wednesday, 21:00. The RBNZ is expected to leave the interest Official Cash Rate unchanged at 3.00% this time. After two  rate hikes, there’s a notion that inflation isn’t a threat that needs to be handled by a higher rate. In addition, the unemployment rate leaped above 7% once again, showing that New Zealand still needs to support the economic recovery. It’s important to note the accompanying rate statement and the wording at the press conference that follows the rate decision. This may impact the Aussie as well.
8. Swiss rate decision: Published Thursday, 12:00. The quarterly announcement of the Libor Rate isn’t expected to provide a rate hike, and it’s expected to remain at the rock bottom rate of 0.25%. The Swiss economy is doing great, but there are no inflationary pressures that call for a hike. In the past, the Swiss National Bank intervened in the markets to weaken the Swiss Franc immediately after the release. It seems that they gave up on this after losing money on these moves. -So, EUR/CHF reached new all-time lows. Will they intervene now? It’s important to follow the SNB Monetary Policy Assessment.
9. US Unemployment Claims: Published Thursday, 12:30. Jobless claims surprised last week with an unexpected drop to 451K. This adds to the good news from the Non-Farm Payrolls. This time, a rise to 463K is expected. Only a drop under 430K will be significant.
10. US PPI: Published Thursday, 12:30. Producer prices are very stable, like consumer prices, causing worries of deflation. Following a rise of 0.2% last month, PPI is expected to rise by 0.3%. Core PPI is likely to rise by 0.1%, weaker than last month’s 0.3% rise.
11. TIC Long-Term Purchases: Published Thursday, 13:00. This indicator actually reflects the trust that foreigners put in the US economy. After the turmoil in the markets earlier this year, the figure rose above 100 billion, but then dropped and reached 44.4 billion last month. It’s expected to slide below 40 billion this time.
12. US Philly Fed Manufacturing Index: Published Thursday, 14:00. This important industrial gauge shocked everybody last month as it turned negative, -7.7 points meaning  deteriorating economic conditions, and showed the weakness of the US economy. A recovery is predicted now, with the index lifting its head out of the water and scoring 0.9 points.
13. US CPI: Published Friday, 12:30. Will the US plunge into deflation? Probably not so soon. Last month’s rises will probably be repeated this time, with a 0.3% rise in CPI and a 0.1% rise in Core CPI, meaning that prices are still gradually rising. Any result will rock the markets.
14. US Consumer Sentiment: Published Friday, 13:55. To close the week, the University of Michigan releases the initial release of its consumer sentiment survey. Sentiment is expected to improve, with the score rising from 68.9 to 70.3 points.

All times are GMT.

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

Further reading:

• For a broad view of all the week’s major events worldwide, read the  USD outlook.
• For EUR/USD, check out  the  Euro/Dollar Forecast.
• For GBP/USD  (cable), look into the  British Pound forecast.
• For the Australian dollar (Aussie), check out the  AUD/USD forecast.
• For the New Zealand dollar (kiwi), read the  NZD/USD forecast.
• For USD/CAD (loonie), check out the  Canadian dollar forecast.

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free..