Forex Weekly Outlook (October 09-13)
October 8, 2017

Weekly Forex Outlook of EURUSD

 

Forex Outlook: EURUSD fell to its lowest level in 2 months as the political crisis in Spain and positive economic data from the US continued to weigh down the pair. Catalonia voted to split with Spain a week ago, however, Spanish courts blocked the independence movement and have suspended an important meeting of Catalonia’s regional parliament on Monday. This was the Catalan President’s first opportunity to formalize their declaration of independence under a referendum law that the Spanish Constitutional Courts have ruled as illegal. 

The minutes from the last monetary policy meeting did not reflect an overly hawkish central bank as the members felt that even with a reduction in their Quantitative Easing program, a substantial stimulus is still needed. Besides, some members also expressed concerns about the speed of the euro’s rise and proposed to monitor exchange rate more diligently.  The cautious tone of the ECB members suggests that while the central bank is committed to reducing bond purchases, they won’t be raising interest rates anytime soon.

The economic data from US to look forward to are FOMC minutes, PPI figures, Retail sales and Consumer price index.  From the Euro side, Germany’s industrial production and trade balance reports are scheduled for release in the new week but the focus will be on Thursday’s speech by ECB President Draghi.  

Weekly Forex Outlook of USDJPY

 

Forex Outlook: USDJPY ended with a fourth consecutive weekly gain to close at 112.6 on the back of strong ISM manufacturing & Services PMI numbers and hawkish Fed speakers. The stronger manufacturing and non-manufacturing ISM report set the dollar’s positive tone at the beginning of the week. while the impact of the hurricanes on payrolls was more significant than economists anticipated (Expected:80K, Actual-33K), investors quickly discounted the headline number and instead capitalized on to the upward revision in August, the strong 0.5% rise in average hourly earnings and the lowest unemployment rate (4.2) since 2001.  The upward trend in Dollar came to a halt after reports circulated that North Korea could test missiles this weekend. The better than expected manufacturing orders and employment index numbers reinforce the Fed’s hawkishness helped drive up expectations for a year-end rate hike to 77% from 70% one week prior. Investors are also positive that the payroll figures will be revised higher in the next month as the similar story had happened during Hurricane Katrina as well. Monday is expected to be less volatile as the US, CAD, and Japan will be on holiday.  

The economic data from US to look forward to are FOMC minutes, PPI figures, Retail sales and Consumer price index. The investors are expected to look for the affirmation of the members on December rate hike and as evident from the hawkish tome of the fed members in their speeches last week.

Weekly Forex Outlook of USDCAD

Forex Outlook: USDCAD ended the week on a positive tone at 1.25292, which is its fourth consecutive weekly gain. The strength of the USD on the back of strong PMI figures and Hawkish FOMC members and CAD’s weakness after Poloz’z cautious tone on the economic growth and Inflation resulted in the pair gaining 150 Pips last week. The stronger manufacturing and non-manufacturing ISM report set the dollar’s positive tone at the beginning of the week. while the impact of the hurricanes on payrolls was more significant than economists anticipated (Expected:80K, Actual-33K), investors quickly discounted the headline number and instead capitalized on to the upward revision in August, the strong 0.5% rise in average hourly earnings and the lowest unemployment rate (4.2) since 2001.  The upward trend in Dollar came to a halt after reports circulated that North Korea could test missiles this weekend. The better than expected manufacturing orders and employment index numbers reinforce the Fed’s hawkishness and helped drive up expectations for a year-end rate hike to 77% from 70% one week prior. Investors are also positive that the payroll figures will be revised higher in the next month as the similar story had happened during Hurricane Katrina as well.

The employment figures from Canada missed the expectations on Friday, with only 10K new jobs added in the economy against the expected 12K jobs. This was Canada’s 10th consecutive gain in employment figures. Although the job growth in Canada has been strengthening, the widening Trade deficit is expected to weigh down the currency, given its dependence on the exports. Monday is expected to be less volatile as the US, CAD, and Japan will be on holiday.

 The economic data from US to look forward to are FOMC minutes, PPI figures, Retail sales and Consumer price index. The investors are expected to look for the affirmation of the members on December rate hike and as evident from the hawkish tome of the fed members in their speeches last week, Dollar is more likely to strengthen further if the Geo-political situation remain stable.

Weekly Forex Outlook of GBPUSD

Forex Outlook: The pair continued its downfall and lost more than 330 pips during the past week and broke below the 1.31 level, posting a third consecutive weekly loss. With the third consecutive loss, the pair is now trading at a one month low. The uncertainty over Theresa May’s leadership and Brexit referendum continued to weigh on GBP after former UK conservative party chairman commented that 30 MPs, including 5 former cabinet ministers want PM May to resign. Theresa May responded to the claims by saying the She is providing “Calm leadership” and has the full support of her cabinet. The positive comments from May did not change the negative mood for GBP as the economic data continued to dampen the sentiment. The UK PMI figures released last week showed Construction and Manufacturing PMI missing expectations and that set the tone for GBP for the previous week.

The stronger manufacturing and non-manufacturing ISM report set the dollar’s positive tone at the beginning of the week. while the impact of the hurricanes on payrolls was more significant than economists anticipated (Expected:80K, Actual-33K), investors quickly discounted the headline number and instead capitalized on to the upward revision in August, the strong 0.5% rise in average hourly earnings and the lowest unemployment rate (4.2) since 2001. The upward trend in Dollar came to a halt after reports circulated that North Korea could test missiles this weekend. The better than expected manufacturing orders and employment index numbers reinforce the Fed’s hawkishness and helped drive up expectations for a year-end rate hike to 77% from 70% one week prior. Investors are also positive that the payroll figures will be revised higher in the next month as the similar story had happened during Hurricane Katrina as well. Monday is expected to be less volatile as the US, CAD, and Japan will be on holiday.  

The economic data from the US to look forward to being FOMC minutes, PPI figures, Retail sales and Consumer price index. The investors are expected to look for the affirmation of the members on December rate hike and as evident from the hawkish tome of the fed members in their speeches last week, Dollar is more likely to strengthen further if the Geo-political situation remains stable.

Weekly Forex Outlook of AUDUSD

Forex Outlook: AUDUSD extended its losses and posted its fourth consecutive weekly loss to close at 0.77727. With the fourth consecutive weekly loss, the pair is now trading at a 3-month low. The Dovish RBA members, a slowdown in Manufacturing and service sector and largest amount of drop in retail sales since March 2013 has encouraged the sellers to short the pair heavily. The RBA left the interest rate unchanged at 1.5% and maintained its rhetoric on the AUD strengthening dampening the economic growth. Adding on to the downward pressure, RBA’s Harper stated that the RBA is not ruling out a rate cut which resulted in the pair weakening further. The stronger manufacturing and non-manufacturing ISM report set the dollar’s positive tone at the beginning of the week. while the impact of the hurricanes on payrolls was more significant than economists anticipated (Expected:80K, Actual-33K), investors quickly discounted the headline number and instead capitalized on to the upward revision in August, the strong 0.5% rise in average hourly earnings and the lowest unemployment rate (4.2) since 2001.  The upward trend in Dollar came to a halt after reports circulated that North Korea could test missiles this weekend. The better than expected manufacturing orders and employment index numbers reinforce the Fed’s hawkishness and helped drive up expectations for a year-end rate hike to 77% from 70% one week prior. Investors are also positive that the payroll figures will be revised higher in the next month as the similar story had happened during Hurricane Katrina as well. Monday is expected to be less volatile as the US, CAD and Japan will be on holiday.  

The economic data from US to look forward to are FOMC minutes, PPI figures, Retail sales and Consumer price index. The investors are expected to look for the affirmation of the members on December rate hike and as evident from the hawkish tome of the fed members in their speeches last week, Dollar is more likely to strengthen further if the Geo-political situation remain stable. The Chinese exports are also expected to be watched closely as the World bank upgraded GDP forecast for China.

Weekly Forex Outlook of USD/CHF

Forex Outlook: The pair ended the week on a positive note to close at 0.97730. The Swiss National Bank’s holdings of foreign currency touched a record 724.4 billion francs ($739 billion) in September, an increase of 1 percent from August, however, investors ignored the data as the focus had shifted towards NFP numbers. The stronger manufacturing and non-manufacturing ISM report set the dollar’s positive tone at the beginning of the week. while the impact of the hurricanes on payrolls was more significant than economists anticipated (Expected:80K, Actual-33K), investors quickly discounted the headline number and instead capitalized on to the upward revision in August, the strong 0.5% rise in average hourly earnings and the lowest unemployment rate (4.2) since 2001.  The upward trend in Dollar came to a halt after reports circulated that North Korea could test missiles this weekend.

The better than expected manufacturing orders and employment index numbers reinforce the Fed’s hawkishness and helped drive up expectations for a year-end rate hike to 77% from 70% one week prior. Investors are also positive that the payroll figures will be revised higher in the next month as the similar story had happened during Hurricane Katrina as well. The economic data to look forward to from CHF is unemployment rate. Monday is expected to be less volatile as the US, CAD and Japan will be on holiday.  

The economic data from US to look forward to are FOMC minutes, PPI figures, Retail sales and Consumer price index. The investors are expected to look for the affirmation of the members on December rate hike and as evident from the hawkish tome of the fed members in their speeches last week, Dollar is more likely to strengthen further if the Geo-political situation remain stable.

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