Forex Weekly Outlook October 10-14

Forex Weekly Outlook October 10-14

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October started with a bang: a stronger US dollar and a flash crash in the pound. Will we get more action? A rate decision in the UK, data regarding the US consumer, the Fed’s meeting minutes and Yellen’s public appearance stand out. These are the main events on forex calendar. Join us for our weekly outlook on these top events.

September’s NFP release fell short of economists’ expectations with a job creation of 156,000 and a rise of 0.10% in the unemployment rate. However, the overall data was broadly in line with forecasts. This report comes at a critical time for the Federal Reserve as the Fed’s considers raising rates back to normal. Analysts expect the Fed to hike again in December. Another big event that dominated was the flash crash of the pound. A sudden drop under 1.20 in GBP/USD was followed by a not-so-full recovery. Let’s start,

  1. German ZEW Economic Sentiment: Tuesday, 9:00. German analysts and investors’ economic sentiment remained unchanged in September at 0.5, contrary to expectations for a rise to 2.8 points. Investors remained cautious about Germany’s economic outlook as exports, mainly to non-EU countries, as well as industrial production have disappointed. Meanwhile, the economic environment in the European Union has improved, raising chances for a more positive reading in October. Economic sentiment is expected to improve to 4.2.
  2. US FOMC Meeting Minutes: Wednesday, 18:00. These are the minutes from the latest Fed decision (rates unchanged): the one in which 3 members dissented in favor of a hike and where the Fed talked about a stronger case for a rate hike, handing heavy hints about December. How confident are the members about the economy? Is inflation picking up? We will get some insights in the minutes.
  3. UK Rate decision: Thursday, 11:00. The Bank of England has kept its main interest rate at 0.25%, but left the door open for another cut in the coming months. Some economic indicators have strengthened more than expected but a majority of members support a further cut during the year. GDP growth reading for the third quarter to be released before the meeting of the MPC in November will be important for the board’s decision. The MPC expect a boost in growth during 2017 if the present economic momentum continues.
  4. US Unemployment Claims: Thursday, 12:30. The number of Americans filing initial claims for unemployment benefits fell by 5,000 to 249,000 at the end of September, showing a low level of layoffs just before the monthly NFP report. Economists expected a rise to 255,000. The less volatile four-week average of initial claims fell by 2,500 to 253,500, the lowest level since December 1973. The number of new claims is expected to reach 252,000 this week.
  5. US Crude Oil Inventories: Thursday, 15:00. U.S. crude stocks fell 3.0 million barrels in the week to Sept. 30. This was the fifth consecutive week of declines. Economists expected a rise of 1.1 million barrels. Despite the declines in stock overall oil inventories remained at their highest in this century. Total U.S. crude inventories, excluding the U.S. Strategic Petroleum Reserve, fell below 500 million barrels for the first time since January, to 499.7 million. However, the historic average has been around 328 million barrels.
  6. US Retail sales: Friday, 12:30. U.S. retail sales declined more than expected in August amid a slowdown in purchases of automobiles and a range of other goods, suggesting slower domestic demand. Retail sales dropped 0.3% following an upwardly revised 0.1% gain in July. Sales were up 1.9% from a year ago. Excluding automobiles, gasoline, building materials and food services, retail sales fell 0.1% last month after a downwardly revised 0.1% decline in July. Economists expected retail sales to drop 0.1% while core sales to gain 0.3%. This data was followed by a slump in manufacturing activity in August, raising concerns over the third quarter growth rate. Retail sales is expected to gain 0.6%, while core sakes are predicted to rise 0.4%.
  7. US UoM Consumer Sentiment: Friday, 14:00.  U.S. consumer confidence remained unchanged in September ay 89.8. Economists expected a reading of 91.0. Consumers remained optimistic about their economic prospects. The current conditions index declined to 103.5 from 107.0, while the expectations index climbed to 81.1 from 78.7. U.S. retail sales fell in August which could be a bad sign for the consumer outlook. However, some economists expect sales will pick up again in the coming months. U.S. consumer confidence is expected to climb to 92.1 this
  8. Janet Yellen speaks: Friday, 17:30. Federal Reserve Chair Janet Yellen will give a talk in Boston’s Annual Research Conference. She will talk about the US economic recovery and may give further clues regarding the expected rate hike timetable. Market volatility is expected.

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

*All times are GMT.

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