Weekly Forex Outlook (November 06-10, 2017)
November 5, 2017

Weekly Forex Outlook of Dollar Index

 

Forex Outlook: 

During the FOMC meeting, the Fed indicated that a rate hike in December was very likely and it also noted that a decline in payrolls in September was due to hurricanes and didn’t expect them to “materially alter the course of the national economy over the medium term.” In addition, President Trump announced Jerome Powell as the new chair of the Federal Reserve after the Yellen’s term end in February.

  On Friday, the non-farm payroll growth missed the market expectations of 310 k and stood at 261 k for the month of October and the average hourly earnings didn’t observe a change on a monthly basis and brought down the annual wage growth to 2.4%. However, the unemployment rate fell to 4.1%, the lowest level since 2000 and the Non-manufacturing PMI rose to its best level since 2008 at 60.1.

In the week ahead, there are no major economic releases from the US in the upcoming week. However, Jennet Yellen is expected to deliver acceptance remarks at the Paul H. Douglas Ethics Award presentation in Washington DC on Monday. Dollar was predicted to hold onto its gains during the next week on the back of an increased market expectations of a rate hike in December and an upbeat ISM Non-Manufacturing PMI.

Weekly Forex Outlook of EURUSD

 

Forex Outlook: 

The eurozone inflation for the month of October was observed to have edged down to 1.4% against the expectations of 1.5%. However, the Q3 GDP stood at 0.6% above the market expectations of 0.5% and the unemployment rate was at its lowest level since March 2009 at 8.9%.

In addition, the German Manufacturing PMI stood at its highest levels since April 2011 at 60.6. The Eurozone Manufacturing PMI was also seen accelerating at 58.6 for the third straight month. Lastly, the employment market of Germany was seen firm as the unemployment rolls declined for the third straight month.

In the week ahead, the finance ministers of euro-zone are scheduled to meet in Brussels to discuss the current matters at Eurogroup Meeting on Monday. The agendas concerning the changes in the ECB policy rising growth and crisis in Catalonia and its economic impact will be discussed. It is  predicted that any statement concerning any of the matters is expected to impact the pair in any direction. However, positive sentiment from USD on the back increased market expectations of a rate hike in December and an upbeat ISM Non-Manufacturing PMI.

Weekly Forex Outlook of USDJPY

 

Forex Outlook:  It was predicted last week that the Bank of Japan will not make any changes in its current monetary policy stance and will leave its interest rates and QE targets unchanged and the same was observed as the BoJ kept the policy stance unchanged for the 9th consecutive meeting.

In the week ahead, the key event is the release of latest BoJ Monetary Policy meeting minutes followed by BoJ Governor Kuroda speech on Monday at a Business Leaders’ meeting in Nagoya. However, positive sentiment from USD on the back increased market expectations of a rate hike in December and an upbeat ISM Non-Manufacturing PMI.

Weekly Forex Outlook of USDCAD

Forex Outlook: 

 It was predicted last week that positive sentiment from USD on the back of expected hawkish comments from the fed is expected to weigh on the pair. During the week, the GDP data release from Canada saw that the Canadian economy contracted in the month of August against the market expectation of a small gain of 0.1%. The fall in the GDP amounting to 0.1% was the first drop since October 2016. However, the employment report released on Friday saw that the economy added 35.3k jobs during October against the market expectations of a 15k rise which added to the strength of the Canadian dollar.

In the week ahead, the Richard Ivey Business School is expected to release the Purchasing Manager Index for the month of October which is expected to observe an uptick at 60.2 against its previous release of 59.6. on Monday. In addition, BoC Governor Poloz is expected to make a speech on “The Ability of Central Bank to understand Inflation” at an event hosted by the Montreal Chartered Financial Analyst Society and the Council on Foreign Relations in Montreal. However, positive sentiment from USD on the back increased market expectations of a rate hike in December and an upbeat ISM Non-Manufacturing PMI.

 

Weekly Forex Outlook of GBPUSD

Forex Outlook:

It was predicted last week that BoE will hike the interest rate by 25bps on the back of the hawkish views from the previous BoE meeting minutes. During the latest BoE interest rate meeting, the bank did raise the interest by 25bps to 0.50% with a 7:2 majority. However, the dovish remarks from Bank of England wherein it foresees only two rate hikes over the three years horizon and said that the rate hikes will be gradual and dependent on Brexit resulted in an immediate weakness in the pair.

In the week ahead, the key event is the resumption of the Brexit talks wherein “Michel Barnier, the European Commission’s Chief Negotiator, and David Davis, Secretary of State for Exiting the European Union, agreed that the two teams would meet for Article 50 negotiations on 9 and 10 November 2017”. In addition, NIESR is expected to release the UK’s growth rate for August to October on Tuesday. In addition, UK is scheduled to release its Industrial Production data for the month of September which is expected to see a rise of a 0.1% vs the previous release of 0.2%, followed by Manufacturing Production data which is also expected to see a smaller increase of 0.3% compared to a rise of 0.4% in the last month’s release.

Weekly Forex Outlook of AUDUSD

Forex Outlook:

It was predicted last week that positive sentiment from USD on the back of expected hawkish comments from the fed is expected to weigh on the pair. During the week, the data from Australia showed that the exports for the month of September grew by 3% and the Trade Balance showed an uptick at 1.74 billion against the market expectations of 1.2 billion.

In addition, the Retail sales data came out to be flat against the market expectations of a 0.4% rise after a 0.5% fall last month. Moreover, it was reported by the Australian authorities that the composition of the CPI calculations will be changed which according to reports imply lower inflation rates during 2018.

In the week ahead, the key event is the latest interest rate decision by RBA on Tuesday. It is expected that the Central bank to keep the interest rates unchanged at record low of 1.5% for the 14th straight meeting, the bank is also expected to maintain a neutral policy stance. The interest rate decision on Tuesday will be followed by the release of the quarterly monetary policy statement by RBA on Friday. In addition, China is expected to release its Export and Import data for the month of October on Wednesday followed by CPI figures on Thursday.

Weekly Forex Outlook of USDCHF

Forex Outlook: 

It was predicted last week that the positive sentiment from USD on the back of expected hawkish comments from the fed is expected to lead the pair. During the FOMC meeting, the Fed indicated that a rate hike in December was very likely and it also noted that a decline in payrolls in September was due to hurricanes and didn’t expect them to “materially alter the course of the national economy over the medium term.”

In the week ahead, Switzerland is expected to release its CPI data for the month of October on Monday wherein the market expects the data to remain unchanged. In addition, the Chairman of Swiss Nation Bank, Thomas Jordan is scheduled to speak in Frankfurt at Center for Financial Studies Presidential Lecture on Thursday, the topic of his speech is “Independence of Central Banks after the Financial Crisis: The Swiss Perspective”. However, positive sentiment from USD on the back increased market expectations of a rate hike in December and an upbeat ISM Non-Manufacturing PMI.

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