Forex Weekly Outlook

[Samirofi]

August 18-22

The US dollar was able to advance against the major currencies but retreated against commodity currencies in a week that saw some action. US housing and inflation data, Inflation data in the UK, the FOMC Meeting Minutes, and Janet Yellen’s speech are a few of the major events on Forex calendar. Follow along as we explore the Forex market movers for this week.


US retail sales disappointed with a flat reading in July, a poor start to the third quarter, suggesting some loss of momentum. Also jobless claims fell short of predictions with a rise back above 300K and JOLTS job opening were only OK. Will this allow Yellen to continue her dovish stance in Jackson Hole? The pound that was pounded down by Mark Carney. Without wage growth, rates cannot rise fast, and this theme is relevant also for other countries. In Germany, another fall in business confidence is certainly worrying and weaker than expected GDP numbers confirmed the fragile nature of the euro-zone recovery. And in Japan, the fall in GDP has been sharp but there was a sliver lining


Updates:

• Aug 18, 10:20: Monitoring Sterling Volatility: A calmer tone has emerged in the past few sessions that suggests the second half of the month could prove...

1. UK Inflation data: Tuesday, 8:30. UK consumer prices edged up 1.9% in June, amid price rises in food and summer clothes. The reading was higher than the 1.6% climb forecast by analysts and topped May’s 1.5% increase. This rise may prompt the BOE to increase rates sooner than estimated. Inflation is expected to remain tame in the coming months, however, the inflation threat will rise if wages increase. UK consumer prices are expected to reach 1.8% this time.
2. US Building Permits: Tuesday, 12:20. U.S. housing starts and building permits unexpectedly fell in June, indicating uneven growth in the housing market, following the slowdown in late 2013. Permits declined 4.2% to a 963,000-unit pace in June, while economists expected them to rise to a 1.04-million unit pace. Permits for single-family homes edged up 2.6% to a 631,000 unit-pace, the highest level since November. Permits for multi-family housing plunged 14.9% to a 332,000-unit pace. A rise to on million unit pace is forecasted now.
3. US Inflation data: Tuesday, 12:30. U.S. consumer prices gained 0.3% in June, following 0.4% increase in May, amid a rise in gasoline prices. The rise was in line with market forecast. On a yearly base CPI edged up 2.1% as in May, indicating inflationary pressures are building up. Fed Chair Janet warned the Fed may raise interest rates sooner than estimated if the job market continued to improve. Meanwhile, core inflation excluding energy prices rose 0.1% after rising 0.3% in May. In the 12 months through June, the core CPI increased 1.9 % after climbing 2.0% in May. Consumer prices are expected to rise 0.1% , while core prices are expected to gain 0.2%.
4. US FOMC Meeting Minutes: Wednesday, 18:00. In the last meeting in July, the Fed decided to taper bond buys for the sixth time, as expected and sent a mixed message: it show more calm about inflation reaching its target, but did stress that the labor market is underutilized. The minutes will allow a peek into the internal debate and could hint about the next moves of Yellen and her colleagues.
5. US Unemployment Claims: Thursday, 12:30. The number of Americans applying for U.S. unemployment benefits increased last week to 311,000 from 290,000 in the previous week. Despite the 21,000 climb, jobless claims remain close to pre-recession levels. The four-week average, a less volatile measure, increased 2,000 to 295,750, nearing the averages before the Great Recession in late 2007. The number of jobless claims is expected to grow by 299,000.
6. US Existing Home Sales: Thursday, 14:00. U.S. existing home sales edged up in June to a seasonally adjusted annualized rate of 5.04 million units, rising 2.6% from May, however still below the 5.16 million-unit rate seen last year. Economists expected a lower figure of 4.98 million units. Inventories remained high and price gains slowed in many parts of the country increasing transactions. Nevertheless, the housing sector remains a concern for the Federal Reserve ever since the rise in mortgage rates in 2013. Existing home sales are expected to reach 5.01 million units.
7. US Philly Fed Manufacturing Index: Thursday, 14:00. Manufacturing activity in the Philadelphia-region picked up in July to 23.9 points, rising 6.1 points from June. This was the fastest gain in more than three years. Analysts expected the index to drop to15.6 in July. The current new orders component increased 17 points. The current indicators for labor market conditions to improve. Philly Fed Manufacturing Index is expected to reach 20.3.
8. Janet Yellen speaks: Friday, 14:00. Federal Reserve Chair Janet Yellen will speak to the central bank’s symposium in Jackson Hole, Wyoming. Yellen will deliver a speech titled “Labor Markets.” She will not answer questions from the audience. The Fed’s three-day gathering of central bankers and economists will be titled “Re-evaluating Labor Market Dynamics.” The conference has foreshadowed some of the Fed’s major policy shifts. Market volatility is expected.
9. Mario Draghi speaks: Friday, 18:30. European Central Bank head Mario Draghi will follow Federal Reserve Chair Janet Yellen’s speech at the Jackson Hole Symposium and talk about employment issues. Market volatility is expected as Draghi might respond to the lack of growth in the euro-zone.

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

*All times are GMT.

[Samirofi]

August 25-29

The dollar dominated once again, with multi-month gains against major currencies. Is it time for a correction or will this trend continue? German Ifo Business Climate, US housing data, Durable Goods Orders and GDP are amongthe highlights of this week. Follow along as we explore the Forex market movers coming our way.


This was quite a week in financial markets: upbeat US data (especially housing) pushed the dollar higher, and it later got a boost from the not-too-dovish FOMC minutes. In Jackson Hole, Janet Yellen’s much awaited speech did not contain any major surprises, and that was enough to keep the ball rolling for the US dollar. EUR/USD dropped to an 11 month low, also due to ongoing tensions around Ukraine and despite not-too-shabby PMIs. The pound was hit hard by weak inflation and despite two members voting for a rate hike. The Aussie showed resilience, defying a weak Chinese figure.

1. German Ifo Business Climate: Monday, 8:00. German business mood continued to deteriorate in July reaching a worse than estimated reading of 108.0, following 109.7 reading posted in June. Tensions in Ukraine and the Middle East remained the chief concern of German businesses. Easing economic momentum after a strong first quarter also contributed to this fall. Domestic activity remained elevated pointing to growth. Business climate is expected to fall to 107.1 this time.
2. US New Home Sales: Monday, 14:00. The U.S. housing market was unable to gain traction in June posting a lower than expected annualized pace, reading of 406,000 from 442,000 in May. Analysts expected sales to pick up to 485,000. Restrictive lending rules, limited land supply and higher mortgage rates weigh on the housing market. Federal Reserve Chair Janet Yellen expressed her concern that the industry is underperforming. New home sales is forecasted to reach 426,000 in July.
3. US Durable Goods Orders: Tuesday, 12:30. Orders for long-lasting U.S. manufactured goods edged up more than expected in June rising 0.7% amid a rise in demand from transportation to machinery and computers and electronic products. The reading was well above predictions of a 0.4% rise following May’s 0.9% decline, suggesting a growth trend in the economy at the end of the second quarter. Meanwhile Core orders picked up 0.8% after a flat reading in May, while expected to gain 0.6%. Orders for durable goods are expected to pick-up 7.4% in July, while Core orders are predicted to gain 0.5%.
4. US CB Consumer Confidence: Tuesday, 14:00. US consumer confidence rose in July to a nearly seven-year high, reaching 90.9, the highest since October 2007. This increase was higher than the 85.5 anticipated by analysts and followed 86.4 points posted in July. The labor market growth trend had a positive effect on consumer spending and equity markets remain strong. Nevertheless, the Federal Reserve policy makers are forecast to keep interest rates low well into 2015 even as they stop monetary stimulus. Consumer confidence is expected to reach 89.1 this time.
5. US GDP: Thursday, 12:30. The US economy grew at annualized pace of 4% in Q1, according to the initial publication. This was certainly encouraging, especially after a significant contraction of 2.1% in Q1 (after yet another revision). The second estimate of GDP is expected to show a minor tick down to 3.9%. Components of growth will also be watched: more consumption and investment will cheered upon, while a buildup of inventory will not be very encouraging
6. US Unemployment Claims: Thursday, 12:30. US Jobless claims fell by 14,000 to 298,000 last week showing the labor market is making progress hand in hand with the growth momentum in the US economy. Last week’s reading was much better than the 302,000 reading expected by analysts. The four week average of claims, a less volatile measure than the weekly figures, increased to 300,750 last week from 296,000. The number of people on jobless benefit rolls dropped by 49,000 to 2.5 million in the week ended Aug. 9, posting the lowest level since June 2007. Jobless claims are predicted to rise 299,000 this week.
7. US Pending Home Sales: Thursday, 14:00. The number of contracts to buy previously owned homes declined 1.1% in June, following a 6.0% gain in May, worse than the 0.2% decline forecasted by analysts. The unexpected fall indicates residential housing is struggling to gain momentum. Limited availability of credit and sluggish wage growth were the main cause for this setback, making it harder for potential buyers to close real estate deals. Federal Reserve Chair Janet Yellen has underlined the sluggish state of the housing market. Analysts believe, the housing market will not get better until a more substantial improvement will occur in the labor market and wage growth. Pending Home Sales are expected to rise 0.6%.
8. Canadian GDP: Friday, 12:30. The Canadian economy expanded in May at the fastest pace in four months rising 0.4% amid a surge in car production. The increase followed a 0.1% gain in April. Analysts expected a smaller rise of 0.3%. Canada registered the fifth consecutive monthly gain, indicating the economy is getting stronger. The central bank estimates a 2.5% gain in the April-to-June period. Manufacturing increased 0.8%, led by a 13% climb in motor vehicle production. Wholesalers registered a 1.2% gain in output in May, making the sector the second largest contributor of growth during the month. The expansion was visible across the board. The economy’s growth rate is expected to reach 0.3% now.

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


*All times are GMT.

[Samirofi]

September 1-5

The euro was the big loser in a week that otherwise saw some profit taking on dollar longs. The first week of September is packed with top tier events as traders return from their vacations. Rate decisions in Australia, Canada, Japan, the UK, and most importantly the euro-zone, and US PMIs leading up to the all-important US NFP report; are the major events in our forex calendar. Check out these events on our weekly outlook.


It was yet another exciting week in markets, as currency action defied the summer heat. The echoes from Draghi’s Jackson Hole speech hit the euro with a gap, and it could never recover. Mediocre EZ data didn’t help. The US reported stronger growth than first estimated: 4.2% growth in Q2 (annualized). Nice consumer confidence and low jobless claims also helped the dollar. But as not all indicators were impressive, it allowed some currencies to recover: the Aussie showed resilience once again, and the loonie made a comeback. On the other hand, the yen suffered from unimpressive inflation data and the pound remained depressed.

1. Australian rate decision: Tuesday, 4:30. Australia’s central bank maintained the cash rate at a record low of 2.5%, saying the nation’s economic outlook remains unclear. The slowdown in mining investment weighs on growth. Therefore, GDP expansion in the June quarter is expected to be weaker than in the previous quarter. Domestic demand is also subdued due to elevated currency. However, lenient monetary policy boosted the housing market. Global issues also contributed to uncertainty tensions in Ukraine and Gaza and the guessing game around the timing of the first rate increase in the US. No change in rats is expected now.
2. US ISM Manufacturing PMI: Tuesday, 14:00. The U.S. manufacturing sector improved strongly in July reaching 57.1 points following 55.3 points in June. Economists expected a reading of 56.1. US Manufacturing remained in expansion territory for 14 consecutive months. New orders advanced to 63.4, rising 4. points from June’s reading of 58.9. Production edged up to 61.2, from 60 and the employment soared to 58.2, up 5.4 points from June’s reading of 53. A slight drop to 57 is forecasted this time.
3. Australian GDP: Wednesday, 1:30. Australia’s economy expanded 1.1% in the first quarter beating expectations for a 0.9% growth rate. The high rise was explained by the unexpected growth to the mining, financial and insurance services and the construction boom. The rate of expansion in the last 12 months to March reached 3.5% indicating the economy is resilient. The RBA projects a growth rate of 2.75% for this year and a rise of 2.5% for 2015. Australia’s economy is predicted to expand 0.4% in the second quarter.
4. Canadian rate decision: Wednesday, 14:00. Canada’s central bank maintained its overnight rate target at 1% as it had been since September 2010. The Bank of Canada said global economic growth was subdued until April Monetary Policy Report, but is expected to pick up in the following months. In light of the lukewarm global outlook, Canada’s GDP is expected to be weaker than previously expected. However, the softer Canadian dollar and forecast for increases in global demand, are expected to expand exports leading to higher growth rate. Real GDP growth in Canada was expected to average around 2 ¼ % in 2014-16. Rates are expected to remain unchanged.
5. Rate decision in Japan: Thursday. The Bank of Japan kept its record stimulus measures to increase the monetary base at an annual pace of 60 trillion yen to 70 trillion yen, after weak releases of production and export data. Exports weakened in June as well as retail sales. Japan’s economy shrank at an annual pace of 6.8% in the second quarter due to by a sales tax hike introduced in April and GDP contracted 1.7% from the first quarter.
6. Rate decision in the UK: Thursday, 11:00. Bank of England policymakers decided to leave interest rates at 0.5% in their August meeting, however, for the first time in three years, two members unexpectedly voted to tighten policy and raise interest rates to 0.75%. The BoE lowered its forecasts for wage growth for 2014 saying it did not want to raise rates until stronger wage rises occur despite a decline in the unemployment rate which may lead to wage growth. Most of the MPC members said the inflation outlook was too weak to justify a rate hike despite a positive growth rate forecast in 2014.No change is expected now.
7. Rate decision in the Eurozone: Thursday 11:45, press conference at 12:30. Mario Draghi dropped the bomb in Jackson Hole, by acknowledging that low inflation is not only temporary, and that inflation expectations are falling. This raises expectations for action in September’s meeting. However, Draghi is likely to look for a wider consensus, especially from his German colleagues. In addition, the TLTROs come into effect this month, and this could lead the governing council to wait. The not too horrible inflation numbers are also a reason to wait now. Nevertheless, we can expect heavier hints about QE and more pressure to keep the euro down, if not even lower. Some also expect another rate cut, but this is unlikely now. Draghi’s words are set to rock the markets.
8. US ADP Non-Farm Employment Change: Thursday, 12:15. U.S. employers hired 218,000 workers in July, posting the fourth months of private job growth beyond 200,000. However July’s reading was lower than the 234,000 reading anticipated by analysts and considerable bellow June’s rise of 281,000. Economists believe the economy will return to full employment by late 2016 if the pace of growth continues. Jobs in professional and business services increased by 61,000 in July, down from 79,000 in June, while positions in the trade, transportation and utilities category grew by 52,000 versus 56,000 in June. An addition of 216,000 jobs is expected now.
9. US Trade Balance: Thursday, 12:30. The U.S. trade deficit narrowed in June to its lowest level since January contracting to a seasonally adjusted $41.5 billion, from $44.7 billion in May. The improvement occurred due to a fall in imports, led by lower shipments of cellphones, petroleum, and cars. Exports climbed 0.1% to $195.9 billion, a record high. While imports fell 1.2%, the most in a year, to $237.4 billion. The unexpected drop implies that growth was stronger in the second quarter than initially estimated. Americans are buying more U.S. products, increasing economic expansion. The economy grew at a 4% annual rate in the second quarter, but this estimate included higher trade deficit than was eventually registered in June. The U.S. trade deficit is expected to reach 42.5.
10. US Unemployment Claims: Thursday, 12:30. The number of Americans applying for unemployment benefits declined by 1,000 last week to a seasonally adjusted 298,000, indicating fewer layoffs and strong hiring. The four-week average, a less volatile measure, fell to 299,750. Employers are more confident in the economy therefore reduce dismissals. Employers added an average of 230,000 jobs a month this year, above the average of 195,000 in 2013. Average job gains since February have been the best in eight years. The number of jobless claims is expected tro increase by 298,000 this week.
11. US ISM Non-Manufacturing PMI: Thursday, 14:00. Service sector activity in the U.S. soared in July to 58.7 from a reading of 56.0 in June, rising at the fastest rate in more than three years. The reading was better than the 56.6 estimated by analysts, suggesting a growth trend in the US economy and a positive outlook for the coming months. The Non-Manufacturing Business Activity Index climbed to 62.4, from 57.5 posted in June, The New Orders Index registered 64.9, from 61.2 registered in June. The Employment Index edged up 1.6 points to 56 from the June reading of 54.4 and indicates growth for the fifth consecutive month. Service sector activity is expected to decline to 57.3.
12. Canadian employment data: Friday, 12:30. Canadian job market rebounded in July with a 42,000 job increase, following a 10,000 decline in the previous month. The reading nearly doubled estimates for a 25,400 job addition. July’s labor market figures were distorted by an “isolated incident” due to “human error” at Statistics Canada. Meanwhile, the unemployment rate declined to 7% in July, from 7.1% reading in the previous month. Canada’s workforce is expected to expand by 10,300 positions while the unemployment rate is predicted to remain at 7%.
13. US Non-Farm Payrolls and Unemployment rate: Friday, 12:30. US nonfarm payrolls edged up 209,000 in July after an upwardly revised increase of 298K in June. The reading was worse than the 231,000 rise projected by analysts. However job growth remained above 200,000 in the last six months. The unemployment rate edged up to 6.2% from 6.1% a month earlier, due to an increase in the labor force. US nonfarm payrolls is expected to gain 222,000 jobs while the unemployment rate is expected to decline to 6.1%.

That’s it for the major events this week. Stay tuned for coverage on specific currencies
*All times are GMT.

[Samirofi]

September 8-12

The US dollar had another strong week in currency markets, bowing only to the Aussie, as the euro and the pound were hit hard. Can we expect a correction or continuation now? US retail sales and consumer sentiment, Australian employment data and a rate decision in New Zealand are among the major events on our calendar for this week. Here is an outlook on the main market-movers coming our way.


The star of the week was Mario Draghi: the ECB surprised with further rate cuts and also announced a significant ABS program. This sent EUR/USD down over 200 pips to long uptrend support, a move unseen in a long time. In the US, Non-Farm Payrolls disappointed with a gain of only 142K, breaking a winning streak, but this was shrugged off by the mighty dollar. The US economy has seen strong signs of late. In the UK, fears of a Yes vote in the Scottish referendum joined the greenback’s strength to send cable down. Strong Australian GDP, among other events kept the Aussie resilient once again. Some hopes for peace in Ukraine were unhelpful for the yen, that reached a multi-year low against the dollar. Will the action continue?

1. US JOLTS Job Openings: Wednesday, 14:00. The measure of job openings is watched closely by the Federal Reserve for longer term employment trends, despite the fact that it is lagging: we now get the figure for July, not for August like the NFP. A rise from 4.67 seen in June to 4.72 is expected now.
2. New Zealand Rate decision: Wednesday, 21:00. The Reserve Bank of New Zealand raised its official Cash Rate to 3.5% in July from 3.25% in the previous month. This was the fourth hike in five months amid a growth trend in the economy. The rise was in line with market forecast but economists believe this was the last rise in this hike series, after which the Bank will assess the tightening measures impact on the economy. The Reserve Bank has previously announced another rate hike of 1.25% by the end of 2014 and 2015 reaching a ‘neutral’ level of 4.5%. The bank said the economy was expected to expand at an annual pace of 3.7% in 2014. No changes are forecasted this time.
3. Australian employment data: Thursday, 1:30. Australia’s unemployment rate soared to a 12-year high of 6.4% in July from 6.0% in the previous month while economists expected the rate to remain at 6.0%. The economy contracted 300 jobs following a 15,900 job addition in June. Full-time positions increased by 14,500 while part-time roles declined 14,800. The participation rate, increased by 0.1% to 64.8%. Economists believe this decline is only a temporary glitch reflecting the volatility of month-to-month data. Australia’s job market is expected to gain 15,200 jobs while the Unemployment rate is expected to decline to 6.3%.
4. US Unemployment Claims: Thursday, 12:30. The number of jobless claims increased by 4,000 last week to 302,000, a bit higher than the 300,000 expected by analysts. The four-week moving average of initial claims edged up 3,000 last week to 302,750. The level of continuing claims declined by 64,000 from the previous week and the level of unadjusted continuing claims fell by 95,339 to 2,306,286. Overall, the level of claims last week was well below the 4,388,758 posted a year ago. Jobless claims are expected to increase by 306,000.
5. Haruhiko Kuroda speaks: Friday, 6:05. BOJ Governor Haruhiko Kuroda will speak at the National Graduate Institute for Policy Studies in Tokyo. He may talk about the central bank’s intentions to raise the sales tax again in order to narrow government deficit. Kuroda remained optimistic about pulling out of deflation and reaching the 2% inflation target. BOJ Governor is also positive that Japan’s economy will continue to expand in the months ahead.
6. US Retail sales: Friday, 12:30. U.S. retail sales unexpectedly halted in July, remained unchanged from June, suggesting some loss of momentum in the economy at the beginning of the third quarter. However gob growth continued to be positive, indicating sales activity is bound to strengthen in the coming months. The main fall occurred in the automobile sector declining 0.2% after a 0.3% fall. Meanwhile, core retail sales, excluding automobiles, gasoline, building materials and food services inched up 0.1% in July. Retail sales are predicted to increase 0.3% while core sales are expected to gain 0.2%.
7. US UoM Consumer Sentiment: Friday, 13:55. According to the first read, American consumer confidence unexpectedly dropped in August to a nine-month low of 79.2 points from 81.8 points in July, missing predictions for a reading of 82.7. However, this was later revised to the upside, with the final figure set at 82.5 points, more in line with the strong CB Consumer Confidence. American consumer confidence is expected to pick-up to 83.2 this time.

That’s it for the major events this week. Stay tuned for coverage on specific currencies
*All times are GMT.

[Samirofi]

September 15-19

The dollar was king once again, but some currencies such as the euro fared better than the commodity currencies. The Fed decision and the Scottish Independence Vote stand out as the key events in a week that also consists of other important releases, and promises to be very interesting. Check out these events on our weekly outlook.

While the euro managed to stabilize after Draghi’s drag, other currencies began or continued retreating against the dollar. The pound suffered a big weekend gap that showed the race on Scotland is too close to call, but then recovered quite nicely. Commodity currencies were hit hard: USD/CAD topped 1.10 and AUD/USD reached the 0.90 handle, despite unbelievably strong employment figures.The kiwi remained in its misery. But also the yen continued free falling, with USD/JPY reaching deeper into levels last seen in 2008. Is 110 in sight?
Updates:

1. Haruhiko Kuroda speaks: Tuesday, 5:30. BOE Governor Haruhiko Kuroda will press conference in Osaka. Market volatility is expected, especially if he offers comments about the recent fall in the value of the yen or the weak GDP.
2. UK inflation data: Tuesday, 8:30. Annual inflation rate dropped more than expected in July, reaching 1.6% from 1.9% in June, lowering the chance of an interest rate rise in 2014. Economists expected a smaller decline to 1.8%. The main cause for the sharp fall was price reduction in summer clothing. Inflation was held below the BOE’s 2% target for the seventh consecutive month, indicating the UK economy is stabilizing. However, cost of living and income tax are still too high compared to wage growth. Annual inflation is expected to reach 1.5% in August.
3. German ZEW Economic Sentiment: Tuesday, 9:00. German economic sentiment plunged in August to 8.6 from 27.1 in July. The 18.5 fall brought sentiment to its lowest level since December 2012. Analysts expected a more modest decline to 18.2 points. The Current Conditions Index dropped to 44.3 from 61.8 in July, missing predictions for a decline to 55.5. The ongoing geopolitical tensions are the main reason for the sharp decline. Economic climate is expected to decline further to 5.2.
4. US PPI: Tuesday, 12:30. U.S. producer prices inched marginally in July rising 0.1%, in line with market forecast, following a 0.4% gain in the previous month. The slow advance resulted from a decline in the cost of energy goods, lowering prices of finished goods. Despite the volatility in the PPI series, a trend of inflation is gathering pace, easing the Central Bank’s concerns. The government introduced three new indexes to the PPI series focusing on personal consumption. Personal consumption less food and energy rose 0.2% in July after a 0.3% gain in June. Excluding food, energy and trade services, the index increased 0.2% after a similar rise in June. Producer prices are predicted to gain 0.1% in August.
5. UK employment data: Wednesday, 8:30. The number of people claiming unemployment benefits in the U.K. contracted more-than-expected in July, declining a seasonally adjusted 33,600, after a 39,500 fall in the previous month, lowering the unemployment level to 6.4% in the three months to June. Economists expected a smaller decline of 29,700. Meanwhile, the average earnings index fell 0.2% in the three months to June after a 0.4% gain in the three months to May. The number of job seekers is expected to decline by 29,700 in August.
6. US inflation data: Wednesday, 12:30. U.S. consumer prices inched 0.1% in July, in line with market forecast, following a 0.3% rise in June. On a yearly base, consumer prices gained 2.0%, compared to June’s increase of 2.1%. Excluding the volatile food and energy costs, July core consumer prices gained 0.1% after posting the same gain in June. On an annual basis, core CPI rose 1.9%, unchanged from June. Economists expect core CPI to rise above the 2% target next year, prompting the Fed to raise rates in March. U.S. consumer prices is expected to grow by 0.1% whiel Core CPI is predicted to gain 0.2%.
7. Fed decision: Wednesday, 18:00, press conference at 18:30.. The Fed is expected to taper its bond buys for the 7th time to $15 billion, in the last taper before QE end in October. Some are expecting Yellen and her colleagues to alter the statement regarding the interest rates, removing the word “considerable” from the expected time frame. However, given the recent unexciting job data, there is a better chance that no change in tone will be seen. The economic forecasts could be upgraded and the general message could be somewhat more upbeat, but Yellen might want to keep the hints about the rates to another opportunity. This is a key event for the dollar. Every word in the statement and every word in the press conference will be scrutinized, and the full impact might take time be seen. A surprising removal of the word “considerable” will have a considerable positive effect on USD, while no change in the statement will shift the focus to the general tone and view of the economy by Chair Yellen.
8. New Zealand GDP: Wednesday, 22:45. New Zealand economy expanded 1.0% in the first quarter following a revised 1.0% in the last quarter of 2013. Construction sector was the main contributor to expansion, rising 12.5%, the largest since March 2000. Retail trade edged up 1.4% and 4.4% on a yearly base. Mining rose 6.3% in the first quarter. Household spending remained unchanged, despite the 7.3% gain in real gross national disposable income, the largest ever annual rise. Exports increased 3.1% for the quarter driven by an 18.6% rise in agriculture and fishing products.
9. Switzerland rate decision: Thursday, 7:30. The Swiss National Bank (SNB) is now “celebrating” three years to the EUR/CHF floor of 1.20, and there are no signs this will change anytime soon. The Swiss economy is still experiencing deflation. The bottom low interest rate is expected to remain unchanged, yet some speculate that the SNB might take a page from the ECB’s book and opt for a negative deposit rate. This would weigh on the franc and keep it away from the floor.
10. US Building Permits: Thursday, 12:30. US building permits surged 15.7% in July, reaching a seasonally adjusted annual pace of 1.09-million units. The rise came after two consecutive declines. Economists expected starts to rise to a 969,000-unit rate. The housing market softened after the rise in interest rates. The government reported last month that the homeownership rate hit a 19-year low in the second quarter, while the rental vacancy rate was the lowest in more than 19 years. The number of Building permits is expected to reach 1.04 million units this time.
11. US Unemployment Claims: Thursday, 12:30. The number of Americans seeking U.S. unemployment benefits increased by 11,000 last week to 315,000. However, the four-week average inched up only 750 to 304,000. The average remained 7.1% lower than last year. Unemployment benefits data can be volatile around holidays and could explain the 11,000 rise. Overall, the Us labor market continues to strengthen with a clear growth trend. Jobless claims are expected to grow by 312,000 this week.
12. Janet Yellen speaks: Thursday, 12:45. Federal Reserve Chair Janet Yellen will speak in Washington DC. She may talk about the US labor market and the prospects of a rate hike following the taper period. Market volatility is expected and she will have the chance to clarify anything that she says in the previous day.
13. US Philly Fed Manufacturing Index: Thursday, 14:00. Business conditions in the Philadelphia area improved in August surging to 28 from 23.9 in July. This was the third consecutive rise and posting the highest reading since March 2011. Economists expected a more modest rise to 19.7 points. However despite the less encouraging new orders index, the general tone is positive. Business conditions in the Philadelphia area are expected to decline to 22.8.
14. Scottish Independence Vote: Thursday. In September 18, Scottish voters will decide whether to split from the United Kingdom or stay as one country with England, Wales and Northern Ireland. A YouGov poll conducted for The Sunday Times and released on Sunday showed the “yes” vote at 51% and “no” at 49% and that certainly hurt the pound, while a more updated poll already showed a 4% lead. There are many other polls that impact sterling. Scotland’s first minister and SNP leader Alex Salmond has been a vocal proponent of independence. British Prime Minister David Cameron wants Scotland to remain part of an undivided United Kingdom of Great Britain and Northern Ireland. Uncertainty over the outcome of the Scottish referendum weakened the pound. It’s important to note that the odds lean to a No vote, but nothing is priced in. So, a No vote would send the pound significantly higher, yet a Yes vote would be devastating for the pound, and it could test the 2010 levels.

That’s it for the major events this week. Stay tuned for coverage on specific currencies
*All times are GMT.

[Samirofi]

September 22-26

The dollar had another positive week, advancing against most currencies on the background of the the FOMC meeting. The upcoming week features Mario Draghi’s speech, German Ifo Business Climate, US New Home Sales, US Durable Goods Orders, among other events. Here is an outlook on the major events coming our way.

The FOMC left its language regarding interest rates unchanged, but did present guidelines for an exit strategy and released forecasts showing higher rates in 2015. This eventually gave a boost to the dollar. Scotland voted NO on independence from the UK in the historic referendum. The NO campaign’s victory was more decisive than the opinion polls had suggested, leaving the 307-year union in place. The pound surged in the run up to the results but eventually sold the fact. In the euro-zone, the first installment of the targeted loans (TLTROs) had a poor reception. Does this imply more ECB action? The Japanese yen suffered from a downgrade in the economic assessment and the Aussie was unable to enjoy Chinese stimulus, and eventually lost ground.
Updates:

Updates:

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1. G20 Meetings: Sat-Sun. Finance ministers from the G20 countries gathered in Australia to discuss measures to improve economic growth in the Eurozone by an additional two per cent by 2018. Measures to fight black money and tax avoidance were also discussed in this forum. Last week’s meeting resolutions will initiate the next meeting at Brisbane in November.
2. Mario Draghi speaks: Monday, 13:00. ECB President Mario Draghi is scheduled to testify before the European Parliament’s Economic and Monetary Committee, in Brussels. Draghi may talk about the need for investments alongside governmental aid. Volatility is expected, especially if he touches the hot topics such as ABS and QE, which now seems more probable after the poor first TLTRO.
3. Chinese HSBC Flash Manufacturing PMI: Tuesday, 1:45. The world’s No. 2 is in the spotlight after disappointing industrial output data. This independent forward looking measure stood on 50.2 points in August, reflecting negligible growth. The preliminary figure for September is predicted to stand at 50 – the line separating growth from contraction.
4. German Ifo Business Climate: Wednesday, 8:00. German business sentiment declined for a fourth straight month in August down to 106.3 from 108 in July, amid concerns about the Ukraine crisis and the impact of sanctions imposed by the Eurozone against Russia. The value of German shipments to Russia plunged 15.5% to 15.3 billion euros in the first six months of the year, with major declines in car and machinery shipments. Exports also fell due to smaller orders from Russia. Economists expected a higher reading of 107.1. The lukewarm growth in the Euro area also contributed to the decline in German business sentiment. Another drop to 105.9 is expected now.
5. US New Home Sales: Wednesday, 14:00. Sales of new single-family homes declined for a second straight month in July to a seasonally adjusted annual rate of 412,000, from 422,000 posted in the previous month. Nevertheless, the housing market is on a growth trend. Larger stock of properties and tame prices will help boost demand in the coming months. New homes sales data is considered volatile, despite the decline new home sales were up 12.3 from July last year. Sales of new single-family homes is expected to rise to 432,000.
6. US Durable Goods Orders: Thursday, 12:30. U.S. durable goods orders surged in July by a seasonally adjusted 22.6%, after a revised gain of 2.7% in the previous month while core orders declined unexpectedly by 0.7% following a 1.9% increase in June. The mixed data confused markets. Commercial aircraft orders hit the roof with a 318% increase, after Boeing signed a record number of contracts for new jetliners in July. Cars and trucks sales went up 10.2%. However, core durable goods orders, excluding volatile transportation items, missing forecasts for a 0.5% gain. Core durable goods orders rose by 3% in June. U.S. durable goods orders is expected to plunge 17.7% while Core orders are predicted to rise 0.7%.
7. US Unemployment Claims: Thursday, 12:30. The number of Americans filing initial claims for unemployment benefits plunged unexpectedly last week to 280,000 from 316,000 in the prior week, indicating the lukewarm figures in August were a temporary relapse. Economists expected a small decline to 312,000. US economy has broad-based growth including the housing sector. The number of layoffs continue to fall. The four-week moving average declined by 4,750 to 299,500. The number of jobless claims is expected to reach 294,000 this week.
8. Final US GDP: Friday, 12:30. According to the second release, the US economy grew at a fast clip of 4.2% (annualized) in Q2. This number now carries expectations for another upward revision to 4.6%. This more than compensates for a contraction of 2.1% in Q1.

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


*All times are GMT.

[Samirofi]

Forex Weekly Outlook October 6-10

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:

Updates:

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 confernece.
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 add 29,600 new 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 shed 11,000 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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[Samirofi]

Forex Weekly Outlook October 13-17

The US dollar took a hit, finally correcting its gains, but it didn’t fall too far. UK inflation data, Mario Draghi and Janet Yellen’s speeches, US Retail sales are the major events on our calendar for this week. Here is an outlook on the main market movers coming our way.


Despite continuous positive US data, the FOMC minutes defied expectations for a possible rate hike in the near future, sending the dollar down. The minutes revealed a debate on the necessary normalization period, which the hawks considered too long. Fed minutes also showed that some policymakers feared a stronger dollar will generate downward pressure on inflation and that global economic growth is on a downward trend. Will the dollar continue to decline? In Europe, German numbers were certainly weak, but that didn’t hurt the euro as much as Draghi’s repeat of his commitment to battle low inflation and his words about a rate hike not coming before 2017. Comments about the yen kept the Japanese currency bid and the Aussie recovered despite wobbles in its employment data. Canada enjoyed strong job growth.

1. UK inflation data: Tuesday, 8:30. The annual inflation rate in the UK declined from 1.6% to 1.5% in August, amid lower prices of petrol, food and non-alcoholics drinks. Meanwhile, core inflation, excluding food, alcohol, tobacco and energy, edged up1.9%. However the low inflation bides well with consumer’s purchasing power due to a slow wage growth. UK inflation is expected to decline to 1.4% this time.
2. German ZEW Economic Sentiment: Tuesday, 9:00. German investor confidence declined to a 21 month low of 6.9 in September following a 8.6 reading in August amid stronger political tensions in Europe. Analysts expected an even lower figure of 5.2. This was the lowest reading since December 2012. German economy slowed down in the third quarter which may weaken growth in the second half of the year. German investor confidence s expected to plunge to 0.2.
3. UK Employment data: Wednesday, 8:30. U.K. unemployment rate fell to the lowest level in six years, indicating continued strength in the labor market. Likewise, U.K. jobless claims dropped 37,200, far better than the 30,000 decline estimated by economists. That pushed the total below 1 million for the first time since September 2008. The number of workers rose by 74,000 to 30.6 million. Despite the slow growth in wages, Bank of England Governor Mark Carney is confident that job market growth will eventually boost salaries. U.K. jobless claims are expected to decline further by 34,200 now.
4. Mario Draghi speaks: Wednesday, 7:00, 18:00. Back to the ECB HQ in Frankfurt, Draghi is scheduled to make two speeches in two separate events. At this point we will already have the industrial output number for the euro-zone (it was poor for Germany) as well as some news from the meeting of the financial chiefs. Draghi moves the markets even if he doesn’t say anything new.
5. US retail sales: Tuesday, 12:30. U.S. retail sales gained 0.6% in August amid a buying spree of automobiles and a range of other goods. Economists expected a 0.3% increase as in July. Meanwhile core sales expanded 0.3% exceeding expectations for a 0.2% rise. Consumer sentiment also soared, hitting a 14-month high in September. However lack of real wage growth may weigh on retail sales in the future but the third quarter looks promising. Retail sales are expected to decline by 0.1% , while core sales are predicted to rise 0.2%.
6. US PPI: Tuesday, 12:30. Wholesale prices in the U.S. remained changed in August from the previous month, held back by a plunge in energy costs as well as indicating low inflation in the production pipeline. In the last 12 months, wholesale prices increased 1.8%. The PPI excluding food and energy inched 0.1% from the prior month. Producer prices are predicted to gain 0.1% this time.
7. US Unemployment Claims: Thursday, 12:30. Fewer Americans filed claims for unemployment benefits last week, reducing the average number of applications to the lowest level in eight years reaching 287,750. Applications declined 1,000 to 287,000 last week, suggesting employers keep their workers, expecting continued economic growth including expansion in hiring. The number of people receiving benefits has also fallen steadily to just 2.38 million in the week ended Sept. 27. Jobless claims are expected to reach 286,000 this week.
8. US Philly Fed Manufacturing Index: Thursday, 14:00. Manufacturing activity in the Philadelphia area declined in September to 22.5 from 28 in August which was the highest since March 2011. Economists expected a slightly higher reading of 22.8. Despite the fall in September, the survey reflects continued growth in the region’s manufacturing sector as many indicators for future manufacturing conditions reflect general optimism about growth in activity and employment over the next six months. Manufacturing activity in the Philadelphia area is anticipated to decline further to 19.9.
9. US Building Permits: Friday, 12:30. The number of permits issued for privately-owned housing units reached a seasonally adjusted annual rate of 998,000 in August following the revised July rate of 1,057,000. Economists expected a total of 1,040,000. Single-family permits in August reached 626,000, 0.8% below the revised July figure of 631,000. Authorizations of units in buildings with five units or more were at a rate of 343,000 in August. The number of permits is expected to grow to 1.04 million.
10. Janet Yellen speaks: Friday, 12:30. Federal Reserve Chair Janet Yellen is scheduled to speak in Boston. Yellen may shed more light on the FOMC minutes released last week and the gloomy growth outlook despite positive US economic data. Market volatility is expected.
11. US Consumer Sentiment: Friday, 13:55. The September reading of University of Michigan’s consumer sentiment soared to 84.6, the highest since July 2013, following 82.5 in the final August reading. Despite consumers’ fears of a slowdown in employment growth, anticipations were high on wage expansion. Consumer expectations jumped to 75.6 from the 71.3 reading last month and above a forecast of 73.0. Consumer sentiment s expected to reach 84.3 this time.

* All times are GMT.

[Samirofi]

Forex Weekly Outlook October 27-31

Currencies were mixed in the past week, with the greenback gaining against the euro and the yen, while sliding against the the Aussie and the loonie. The Fed decision is the highlight of the week, alongside Yellen’s speech, GDP in the US and Canada and two additional rate decision. These are a few of the events on our calendar for this week. Follow along as we explore the Forex market movers.


US data looked quite solid in the past week, with inflation and housing both edging above expectations. Also jobless claims kept up, and there is a growing sense that QE is going to end as planned, defying Bullard’s words in the previous week. In the euro-zone, optimism comes from German data but not from France, and the ECB has also corporate bonds on its agenda. The UK has seen disappointing retail sales and no rush to raise interest rates. Chinese GDP came out above expectations and supported the Aussie, but CPI took it away. The kiwi suffered more from its own CPI, while the loonie got a boost from a mildly more hawkish BOC, in the background of the Ottawa shooting. Where are currencies headed next? Let’s start:

1. US Durable Goods Orders: Tuesday, 12:30. US durable goods orders plunged in August due to volatility in aircraft orders. Orders dropped 18.2% after a strong rise of 22.6% in July. However the overall growth trend remained strong. Meantime, Core orders excluding transportation advanced by 0.7% in August after a 0.8% decline in the previous month. Core orders reflect the true trend, rising 17.2% in the three months to August. The rise in orders is also reflected by the constant improvement in the US job market with fewer layoffs and increase hiring. Durable goods orders are projected to gain 0.4% , while Core durable goods orders are expected to increase by 0.5%.
2. US CB Consumer Confidence: Tuesday, 14:00. U.S. consumer confidence worsened in September, falling to 86 from 93.4 in the prior month. Economists expected a milder decline to 92.2. The strong decline may be explained by less favorable assessments of the current job market condition. Consumers expected economic growth to stall in the following months ahead. The outlook index declined to 83.7 from a revised 93.1 reading, while the present conditions index fell to 89.4 from a revised 93.9.
3. US FOMC Statement: Wednesday, 18:00. The Fed is expected to remove the doubts and end QE as planned. However, the “considerable time” guidance regarding low rates is expected to stay in the statement. Bullard surprised markets by suggesting that QE could continue. However, there are reasons to believe that QE will end: FOMC doves support the end of QE, all employment data (NFP, JOLTS, jobless claims) look great and inflation is OK. In addition, changing course on a stock market slide could erode the Fed’s credibility. The genuine worries about global growth is likely to result in leaving the “considerable time” phrase. This is likely to change when the global outlook improves, and when the decision is accompanied by a press conference.
4. NZ rate decision: Wednesday, 20:00. The Reserve Bank of New Zealand kept the official cash rate at 3.5%. Governor Graeme Wheeler stated he won’t rush to raise rates as previously thought, since inflation remains contained. Wheeler also signaled a pause in the bank’s current tightening measures, indicating the bank needs to measure the impact of the four rate hikes this year. The policy statement projects slower inflation by the end of 2015. Rates are expected to remain unchanged at 3.5%.
5. US GDP data: Thursday, 12:30. The third estimate of real gross domestic product release for the second quarter showed an annual rate expansion of 4.6%, following the previous estimate of 4.2%. The 4.6% growth in real GDP showed growing personal consumption, private inventory investment, exports, as well as local government spending. The gains were partially offset by a rise in imports, and a 0.9% decline in federal government expenditures. Personal consumption increased but the main growth force was fixed business investments expanding 9.7%. The BEA expected second quarter corporate profits increased $164.1 billion, compared to a $201.7 billion decrease in the first quarter. 3.1%. An annual growth rate of 3.1% is expected for Q3.
6. US Unemployment Claims: Thursday, 12:30. The number of new claims for U.S. unemployment benefits rose by 17,000 last week to 283,000. Despite the rise, the number of claims remained below 300,000 for a sixth straight week, indicating the US job market continues to strengthen in spite of a global slowdown trend. The four-week moving average fell to its lowest level since May 2000. However, the slowdown trend in major countries is starting to impact the US manufacturing sector. The number of jobless claims is expected to decline to 277,000 this time.
7. Janet Yellen speaks: Thursday, 13:00. Federal Reserve Chair Janet Yellen will speak in Washington DC. Yellen may address the rate hike issue amid continued U.S. economic growth and strengthening in the US labor market. Likewise the Fed Chair may discuss the global slowdown trend which may affect the US economy in the coming months.
8. Japan rate decision: Friday. The Bank of Japan kept monetary policy unchanged at its October meeting. The Bank also unanimously decided to prolong its money market operations to raise the monetary base to an annual pace of between JPY 60 and 70 trillion and reach a 2.0% inflation rate. The central bank was more pessimistic regarding economic conditions, despite stating that the economy is continuing to recover moderately as a trend. Regarding global developments, the BOJ sees a downside risk in the pace of recovery in the US and the unclear state of the Eurozone economy.
9. Canadian GDP: Friday, 12:30. Canada’s economy did now grow in July, from the previous month due to a slowdown in the mining, and oil and gas industries offset by a rise in manufacturing and the public sector. Mining, oil and gas industries contracted by 1.5% in July. Manufacturing expanded by 1% and the public sector by 0.5%. Economists expected a minor growth of 0.2%. This sluggish growth suggests the BOC will be on no hurry to raise rates anytime soon.

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


*All times are GMT.

[Samirofi]

Forex Weekly Outlook November 24-28

The dollar strengthened quite nicely, with the exception of the loonie, as the US economy and the Fed remain firmly on track. Euro-zone inflation data, US, UK and Canadian GDP data, US Durable Goods Orders, and housing data are the most important economic releases in the last week of the month. Here is an outlook on the highlights coming our way.


The FOMC Meeting Minutes release showed that while the Fed is concerned with low inflation expectations and was united around leaving the “considerable time” phrase regarding rates unchanged, global economic issues such as the weakening in Europe, China and Japan are seen to have a limited impact on the US. Most indicators in the US were quite upbeat: inflation firmed more than expected, and so did existing home sales, building permits and the Philly Fed Index. Japan unexpectedly fell into a recession after contracting in Q3, and the country is going to the polls in December. The yen reached new lows. In the euro-zone, Draghi maintained the dovish tone and mentioned outright QE. His comments weighed on the euro, as did weak PMIs. The pound received good news from stronger than expected inflation and retail sales, as well as a more hawkish stance from the BOE. Inflation was also upbeat in Canada, and the Aussie got a boost from a rate cut in China but still remained down on the week. What’s next for currencies?

1. German Ifo Business Climate: Monday, 9:00. German business sentiment declined for the sixth month in October, reaching 103.2 after September’s reading of 104.7. Economists expected a smaller decline to 104.6. Growth in the third quarter was worse than expected with a predicted gain of 0.3%. The survey revealed a drop in current conditions to 108.4 from 110.5 in September and the outlook gauge declined to 98.3 from 99.2. Analysts predict business climate will reach 103 in November.
2. Haruhiko Kuroda speaks: Tuesday, 0:00, 4:45. BOE Governor Haruhiko Kuroda will speak in Nagoya and in Tokyo. Kuroda warned inflation could fall below 1% the disappointing GDP release in November showing the economy slid into recession. BOE Governor started to implement the unprecedented asset purchases decided in the last policy meeting, despite Prime Minister Shinzo Abe’s decision to delay a sales-tax increase. Kuroda may provide clues on further easing measures to boost inflation towards the 2% target.
3. US GDP data: Tuesday, 13:30. The first release of US GDP showed an annualized growth rate of 3.5%, which was above expectations. While it came on top of a gain in government spending, it sill showed that the economy is growing at an above-average rate. Economists expect GDP to be revised down to 3.3%.
4. US CB Consumer Confidence: Tuesday, 13:30. U.S. consumer confidence jumped up strongly in October, hitting a seven-year high of 94.5 from 89 in the previous month amid a further improvement in the Job market raising expectations for higher economic growth. In light of falling gas prices and better job figures, consumer spending is expected to rise in the coming months. U.S. consumer sentiment is predicted to rise to 95.9 this month.
5. UK GDP data: Wednesday, 9:30. According to the initial release, the pace of quarterly growth slowed down to 0.7% in Q3, after reaching 0.9% in Q2. Economists expect the Ukraine crisis will have negative bearings on the manufacturing sector due to a reduction in foreign demand. However once tensions ease, business confidence and investment will rebound across Europe, and the UK will return to full growth. The third quarter growth rate is expected to be confirmed in the second release at 0.7%.
6. US Durable Goods Orders: Wednesday, 13:30. Orders for long lasting goods fell unexpectedly by 1.3% in September, while expected to gain 0.4%. Excluding transportation orders, durable goods orders declined 0.2% and fell 1.5% excluding defense orders. Nondefense new orders for capital goods in September fell 5.4%, while defense new orders for capital goods rose 7.4%. However, the general trend is positive showing a stronger market demand, while aircraft orders tend to be less trustworthy. Analysts expect a decline of 0.4% in Durable Goods Orders and a 0.5% gain in core orders.
7. US Unemployment Claims: Thursday, 13:30. The number of Americans filing claims for unemployment benefits fell last week to 291,000 from 293,000 in the week before. Economists expected a sharper decline to 286,000. The reading continues to suggest an ongoing improvement in the US labor market. The four-week moving average, a more stable gauge, increased 1,750 to 287,500, still showing job growth. Economists forecast 287,000 new claim this week.
8. US New Home Sales: Wednesday, 15:00. Sales of new U.S. single-family homes reached a six-year high in September, rising to a seasonally adjusted annual rate of 467,000. Economists expected an even higher reading of 473,000. August’s reading was sharply revised for the worse to 466,000, indicating the housing recovery remains uncertain. The housing market regained momentum after stalling in the second half of 2013 when mortgage rates soared. Mortgage rates have declined hand in hand with the contraction in the U.S. Treasury debt yields, but slow wage growth weighs on the pace of recovery. Analysts expect new home sales to reach 471,000.
9. Euro-zone inflation data: Friday, 10:00. Inflation in the euro-zone is very low and has remained at low levels for a long time, triggering quite a lot of action from the ECB. The preliminary numbers for November are expected to show a drop in headline inflation, from 0.4% to 0.3%, partly due to the fall in oil prices. Core inflation is predicted to remain at 0.7% for another week in a row.
10. Canadian GDP: Friday, 13:30. Canada’s economy contracted unexpectedly 0.1% in August, declining for the first time in eight months, amid a decline in energy and manufacturing activity. Economists expected a flat reading as in the previous month. The disappointing figure suggests pickup has stalled in the third quarter. Manufacturing output fell 1.2%, reversing the 1.2% gain in the prior month. Service industries gained 0.2% for the month, with wholesale trade gaining 0.5% and the finance and real estate sectors both rising 0.3% in August. Retail activity, however, declined 0.1% and transportation and warehouses dropped 0.3%. Economists forecast a 0.4% gain in September.

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


*All times are GMT.