Weekly Forex Outlook (September 25-29, 2017)
September 17, 2017

Weekly Forex Outlook of EURUSD

The key event during the last week was the FOMC meeting wherein the market looked ahead to whether the Fed would be able to go ahead with a rate hike in December despite the fact that economic data over the past few weeks has not shown any specific signs of drastic improvement in the US economy. The Fed announced that it would initiate the balance sheet reduction and the dot plot indicated that the members of the fed foresee a rate hike in December. In addition, the fed also announced that it would hike interest rate thrice during the course of next year. The pair recovered the majority of its losses post FOMC meeting on the back of strong economic data released on Friday wherein the Manufacturing and Service PMI for both Germany and the EUR beat the expectations and the pair closed the week at 1.1946.

The week ahead is the last week of the month and hence is likely to observe a high month end flow. The German elections on Sunday are likely to keep the market on the backfoot even though Chancellor Angela Merkel is expected to retain power. In addition, Mario Draghi is scheduled to speak at Brussels on Monday before the Economic and Monetary Affairs Committee of the European Parliament on economic and monetary developments and Germany is scheduled to release its employment data on Friday. Moreover, US is expected to release its Durable Goods data (1% exp vs -6.8% previous) on Wednesday, Core Personal Consumption and final reading of Q2 GDP data on Thursday followed by Core Personal Consumption expenditure data on Friday.

Weekly Forex Outlook of USDJPY

The pair observed a positive movement following the Fed decision wherein it announced that it would initiate the balance sheet reduction and the dot plot indicated that the members of the fed foresee a rate hike in December. In addition, the fed also announced that it would hike interest rate thrice during the course of next year. Furthermore, Yellen and the other policymakers stated that the low inflation rate was a “Mystery” but there has been a rise in the same for the time being. The Fed also said that the hurricanes will not alter the general course of the economy and the recovery was on a strong track. However, the gains in the pair observed a halt on Friday on back of continuing geopolitical tensions when the foreign affairs minister of North Korea states that they plan to test a hydrogen bomb in the Pacific Ocean. In response to President Donald Trump’s announcement of new sanctions on North Korea, the country’s leader Kim-Jong Un had warned of the “highest level of hard-line countermeasures in history”.

In the week ahead, Japan is expected to release the BoJ Monetary Policy Meeting Minutes on Tuesday followed by inflation and employment data on Friday. In addition, US is expected to release its Durable Goods data (1% exp vs -6.8% previous) on Wednesday, Core Personal Consumption and final reading of Q2 GDP data on Thursday followed by Core Personal Consumption expenditure data on Friday.

Weekly Forex Outlook of USDCAD

Weekly Forex Outlook - During last week, the pair finally found some support post the FOMC meeting which delivered a hawkish and positive dot plot. The Fed announced that it would initiate the balance sheet reduction and the dot plot indicated that the members of the fed foresee a rate hike in December. In addition, the fed also announced that it would hike interest rate thrice during the course of next year. At the same time, CAD drew some strength from the steady and strong oil prices which continued to trade above $50 for the majority of the week. However, the inflation data from Canada for the month of August which was expected to be at 0.2% missed the expectations but stood better at 0.1% compared to its previous release of 0.0%.

Looking ahead of the week, there is no major economic release from Canada this week, however, US is expected to release its Durable Goods data (1% exp vs -6.8% previous) on Wednesday, Core Personal Consumption and final reading of Q2 GDP data on Thursday followed by Core Personal Consumption expenditure data on Friday.

Weekly Forex Outlook of GBPUSD

The key event during the last week was the FOMC meeting wherein the market looked ahead to whether the Fed would be able to go ahead with a rate hike in December despite the fact that economic data over the past few weeks has not shown any specific signs of drastic improvement in the US economy. The Fed announced that it would initiate the balance sheet reduction and the dot plot indicated that the members of the fed foresee a rate hike in December. In addition, the fed also announced that it would hike interest rate thrice during the course of next year which pushed the pair to its lower ranges. However, the pair observed some strength from pound owing to the fact that the UK government managed to get the Brexit bill passed smoothly through Parliament. Furthermore, there were reports that Theresa May offered 20 billion euros for free access to the market. However, the key speech by Theresa May on Friday offered no certain details regarding the Brexit negotiation but it hinted the possibility that UK might leave the EU prior to March 2019 and proposed a transition period of 2 years which pushed the pair lower to 1.3490.

The week ahead is the last week of the month and hence is likely to observe a high month end flow. UK is expected to release its Inflation Report Hearings on Tuesday followed by Q2 GDP data on Wednesday. In addition, US is expected to release its Durable Goods data (1% exp vs -6.8% previous) on Wednesday, Core Personal Consumption and final reading of Q2 GDP data on Thursday followed by Core Personal Consumption expenditure data on Friday.

 

Weekly Forex Outlook of AUDUSD

During last week, the pair gave up the majority of its gains post the FOMC meeting which delivered a hawkish and positive dot plot. The Fed announced that it would initiate the balance sheet reduction and the dot plot indicated that the members of the fed foresee a rate hike in December. In addition, the fed also announced that it would hike interest rate thrice during the course of next year. Moreover, the RBA’s September meeting minutes stated that the strong exchange rate weighed on the inflation and domestic growth. It also stated that any further rise in the value of the currency might result in a slower rise in growth and inflation.

Looking ahead of the week, there is no major economic release from Australia this week, however, US is expected to release its Durable Goods data (1% exp vs -6.8% previous) on Wednesday, Core Personal Consumption and final reading of Q2 GDP data on Thursday followed by Core Personal Consumption expenditure data on Friday.