Forex Weekly Outlook November 13-17
November 13, 2017

Weekly Forex Outlook of Dollar Index

Forex Outlook: 

It was predicted last week that the dollar will hold onto its gains on the back of an increased market expectations of a rate hike in December and an upbeat ISM Non-Manufacturing PMI. However, there were reports during the week regarding a delay of one year in the corporate tax cut. This was a major setback for the dollar as the corporates were looking to save on taxes this year and as a result, the market started to unwind the dollar long positions which it undertook after the passing of the bill.  

 In the week ahead, even though we believe that the developments in the tax-reforms will have a major impact on the dollar index, the performance of the greenback in the upcoming week will be impacted by economics, politics and monetary policy. At the same time, there are 6 Federal Reserve presidents speaking during the week and the possibility of rate hikes might also impact the performance of the dollar index.

Weekly Forex Outlook of EURUSD

 

Forex Outlook: 

It was predicted last week that with no major economic data, the positive sentiment from USD on the back increased market expectations of a rate hike in December and an upbeat ISM Non-Manufacturing PMI. However, during the week, there were reports regarding a delay of one year in the corporate tax cut which weighed on the dollar index. In addition, the economic forecasts from EU commission were upbeat on the GDP as they stated that the GDP is expected to rise at a rapid pace in nearly a decade.

In the week ahead, Germany is expected to release its inflation data which is expected to be in-line with the previous release at 1.5% (YoY). In addition, EU is scheduled to release its Q3 GDP figures which are expected to observe no change from its previous release of 0.6% (QoQ). Lastly, the inflation data from EU for the month of October is scheduled to release on Thursday wherein the first release of the headline inflation for October showed a drop to 1.4% and a fall in core CPI to 1.1%. 

The major focus of the market will be on the ECB’s president Mario Draghi’s speech at a policy panel at the conference on the topic “Communication challenges for policy effectiveness, accountability and reputation” on Tuesday.

Weekly Forex Outlook of USDJPY

 

Forex Outlook: 

As predicted last week that with no major economic data, the positive sentiment from USD on the back increased market expectations of a rate hike in December and an upbeat ISM Non-Manufacturing PMI. However, during the week, there were reports regarding a delay of one year in the corporate tax cut which weighed on the pair.

Moreover, BoJ’s governor spoke on Monday post the release of its latest Monetary policy minutes and expressed optimism that the improvement in the economy will trigger a higher rate of inflation and will move closer to the target.

In the week ahead, Japan is expected to release its Q3 GDP figures on Wednesday which is expected to observe a growth of 0.3%. My analysis states that an uptick in the GDP numbers would mean a 7th successive release stating a quarterly growth, which is most likely the case as the latest Tankan Survey from BoJ pointed towards the persistence of a strong economic activity which is driven by global economic recovery and firm exports. In addition, BoJ’s governor Haruhiko Kuroda is scheduled to speak at a policy panel at a conference on the topic “Communication challenges for policy effectiveness, accountability and reputation” on Tuesday.

Weekly Forex Outlook of USDCAD

Forex Outlook: 

It was predicted last week that with no major economic data, the positive sentiment from USD on the back increased market expectations of a rate hike in December and an upbeat ISM Non-Manufacturing PMI. However, during the week, there were reports regarding a delay of one year in the corporate tax cut which weighed on the pair. However, during the week, the Governor of BoC, Poloz stated out the challenges faced by the economy and hence the need for the policy to remain cautious. 

In addition, the crude oil prices continued to advance towards a 2-year high and the Ivey PMI was announced higher than the expectations of 60.2 at 63.8 which kept the demand for Canadian dollar afresh during the week.

In the week ahead, Canada is scheduled to release its inflation numbers on Friday wherein the headline inflation is expected to ease to 1.4% YoY from the previous release of 1.6%. It must be noted that the latest Monetary Policy Report from BoC observed a trimming of inflation expectations to 1.4% to 1.6% for the year of 2017 and the estimates for the next year were pushed up to 2.1%.

Moreover, Senior Deputy Governor of BoC, Carolyn A. Wilkins is scheduled to speak before the Money Marketeers of New York University, Inc on the topic “Monetary policy under uncertainty” on Wednesday.

 

Weekly Forex Outlook of GBPUSD

Forex Outlook:

It was predicted last week that with no major economic data, the positive sentiment from USD on the back increased market expectations of a rate hike in December and an upbeat ISM Non-Manufacturing PMI. However, during the week, there were reports regarding a delay of one year in the corporate tax cut which weighed on the pair.

During the week the political turmoil weighed on the pair as the British government lost two ministers owing to various scandals. In addition, the Brexit talks saw no progress even though PM May has been willing to pay the EU the entire Brexit bill and secure a better trade deal.

 From the data front, the trade balance deficit for the month of September was lower at – £2.75B against the expectations of – £4.6B. In addition, the industrial and manufacturing production observed an uptick to 0.7% against the expectations of 0.3%, respectively

In the week ahead, UK is scheduled to release its inflation data on Tuesday wherein the headline CPI is expected to observe a rise to 3.1% YoY and the core CPI is expected to come in at 2.8% YoY against the previous release of 2.7%. It must be noted that the recent Quarterly Inflation Report from BoE stated that the upcoming CPI release could hit 3.2% YoY which will represent the inflation peak.

 On Wednesday, UK is expected to release its latest employment report in which the focus will be on the Average Earnings, which is expected to be at 2.1% 3M YoY and the unemployment rate for September is expected to be in line with the previous release of 4.3%. It is expected that the release of employment report wouldn’t result in any major change in BoE policy as the weak productivity trend and wage growth is rather fixed.

 Lastly, the Retail Sales figure are to be released on Thursday, wherein the market expected the headline figures to come in at 0.1% MoM against the previous release of 0.8% fall and the core is expected to rise 0.1% from the last month’s fall of 0.7%.

 In addition, BoE’s governor Mark Carney is scheduled to speak at a policy panel at a conference on the topic “Communication challenges for policy effectiveness, accountability and reputation” on Tuesday.

Weekly Forex Outlook of AUDUSD

Forex Outlook:

It was predicted last week that the RBA will keep the interest rates unchanged at record low of 1.5% for the 14th straight meeting and the bank was also expected to maintain a neutral policy stanceThe same was observed as the central bank kept the interest rates unchanged and stated that the slow growth in wages and household debts could weigh on spending. The political turmoil continued in Australia as the Australian PM in order to diffuse national crisis forced all lawmakers to declare that they are not dual nationals.

In the week ahead, Australia is scheduled to release its employment report on Thursday and the market expects the employment change to stand at +15k against the previous release of +19.8k and the unemployment rate is expected to fall to 5.6% versus the previous release of 5.5%. The pair is expected to be weighed upon by the cut in the inflation outlook in the RBA’s recent Statement of a Monetary policy wherein they observe the inflation to not meet the 2% target by 2019.

Weekly Forex Outlook of USDCHF

Forex Outlook: 

It was predicted last week that with no major economic data, the positive sentiment from USD on the back increased market expectations of a rate hike in December and an upbeat ISM Non-Manufacturing PMI. However, during the week, there were reports regarding a delay of one year in the corporate tax cut which weighed on the pair.

 During the week the chairman of SNB stated that the Swiss franc was highly valued and was seen committed to its ultra-loose monetary policy. He also stated that the current negative interest rate was a crucial tool for the management of inflation. 

In the week ahead, there is no major economic data release from Switzerland. However, the pair is expected to be driven by the developments in the US tax-reforms bill and the economic releases from the US.

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