Forex Outlook For The Week October 31 – November 4, 2016

The initial US third quarter GDP data reported last week was the best in two years. However, the US dollar had to struggle to maintain the momentum as political issues weighed on the currency despite good growth data. Rate decisions in Australia, Japan, the US and the UK, GDP data from Canada, Employment data from New Zealand Canada and the US Non-Farm Payrolls form a very busy week. These are the major events on our calendar. Join us as we explore the highlights of this week. The country’s economy expanded 2.9 percent following a sluggish growth recorded in the first six months of the current year. This gave an indication that the economy is getting back on track. The solid growth seen in the third quarter might encourage the Federal Reserve to think in terms of increasing the interest rates at least towards the end of the year. Further, the dollar could hold on to the gains despite the revelations that Hillary Clinton was involved in a new email scandal. Elsewhere, worries about a hard Brexit beat the UK’s positive growth figures. The euro, however, staged a recovery because of an upbeat German survey results.

forex market outlookThe data releases scheduled for the week that could cause some amount of movement in the market include interest rate decisions in Japan, the US, Australia and the UK; Canada’s GDP data, Employment data from Canada and New Zealand; and the US Non-Farm Payrolls data.

#1: China Manufacturing PMI (11/01/2016 Tuesday 1:00 GMT)

In September, the National Bureau of Statistics reported that China’s manufacturing PMI was 50.4, unchanged from the reading for August. The reading was also in line with analysts’ expectations. It is expected that the manufacturing PMI will edge down to 50.3 in October.

#2: China Caixin Manufacturing PMI (11/01/2016 Tuesday 1:45 GMT)

The Caixin Manufacturing PMI edged up to 50.1 in the month of September from 50.0 in the previous month. Forecast for October: 50.2

#3: Japan Interest Rate Decision (11/01/2016 Tuesday 3:00 GMT)

Japan’s central bank decided not to change the interest from the present -0.1 percent at the meeting held in September. However, the Bank of Japan noted that yield curve control would be introduced to hasten the fight against deflation. It is expected that the central bank will maintain the interest rate at the same level during this meeting as well.

#4: Japan BoJ Monetary Policy Statement (11/01/2016 3:00 GMT)

This is a tool used by the BOJ to communicate about monetary policy. It consists of the outcome of monetary policy decision and commentary on the economic conditions that led the decision. In addition to projecting the economic outlook, it also offers clues future votes.

#5: Japan Central Bank Press Conference (11/02/2016 Tuesday 3:00 GMT)

The press conference is a method employed by the Bank of Japan to communicate to investors details regarding the monetary policy decision. In the press conference, board members provide information about the factors that influenced the interest rate decision such as inflation and overall economic outlook. Clues as regards the monetary policy decisions in the future will also be provided.

#6: Australia Interest Rate Decision (11/01/2016 Tuesday 3:30 GMT)

In the monetary policy board meeting held in the first week of October, Australia’s central bank decided to hold the cash rate steady at 1.5 percent, as expected by the market, because of the low inflation, subdued labor cost growth and very low cost pressures elsewhere in the world. The Reserve Bank of Australia also indicated that the cash rate is likely to remain low for some more time. Forecast for November: 1.5 percent

#7: Australia RBA Rate Statement (11/01/2016 Tuesday 3:30 GMT)

The Reserve bank of Australia releases a rate statement along with the cash rate announcement. That is a tool employed by the central bank to convey to the investors as to how the decision was arrived at and provide a commentary about the prevailing economic conditions that influenced the decision making process. In addition, it provides economic outlook and clues on future decisions.

#8: UK Manufacturing PMI (11/01/2016 Tuesday 9:30 GMT)

On a seasonally adjusted basis, the Markit/CIPS manufacturing PMI climbed to 55.4 (the highest since June 2014) in September, beating market expectations of 52.1, from 53.4 in the previous month. Forecast for October: 54.6

#9: Canada GDP Data (11/01/2016 Tuesday 12:30 GMT)

Canada’s GDP grew more than that expected by analysts in July. The economy expanded by 0.5 percent against economists’ expectation that it will grow by 0.3 percent. The growth was driven by mining, oil and gas extraction and the manufacturing sectors. Economists expect that the GDP reading for August would be a growth of 0.2 percent.

#10: US ISM Manufacturing PMI (11/01/2016 Tuesday 14:00 GMT)

The ISM manufacturing PMI rebounded in September and reached the 51.5 level from 49.4 in the previous month, indicating expansion. Analysts’ expectation was that the index would come in at 50.4. The ISM manufacturing PMI is expected to edge up to 51.8 in October.

#11: New Zealand GDT Price Index (11/01/2016 Tuesday 15:00 GMT)

In the auction held on October 18, the GDT Price Index rose 1.4 percent after recording a fall of 3 percent in the previous auction.

#12: Canada Central Bank Governor Poloz Speaks (1/01/2016 Tuesday 16:00 GMT)

The Governor of the Bank of Canada Stephen Poloz is scheduled to speak at the British Columbia Business Council in Vancouver. The markets may experience volatility as traders look for clues on monetary policy.

#13: New Zealand Employment Data (11/01/206 Tuesday 21:45 GMT)

In the second quarter, the labor market in New Zealand remained strong as it rose 2.4 percent to touch the 2.5 million mark after recoding a growth of 1.2 percent in the previous quarter. The unemployment rate declined to 5.1 percent from 5.2 percent (revised) in the first quarter. In the third quarter, the job market in New Zealand is expected to expand by 0.6 percent and maintain the unemployment rate at 5.1 percent.

#14: Australia Building Approvals (11/02/2016 Wednesday 00:30 GMT)

On a seasonally adjusted basis, the number of permits issued for dwelling units declined 1.8 percent to 20,788 in August from the previous month. Forecast for September: -2.8 percent.

#15: New Zealand Inflation Expectations (11/02/2016 Wednesday 2:00 GMT)

The Reserve Bank of New Zealand is scheduled to release the inflation expectations statistics for the third quarter. The inflation stood at 1.7 percent in the second quarter.

#16: Japan Central Bank Outlook Report (11/02/2016 Wednesday 5:00 GMT)

Released on a quarterly basis, the Bank of Japan’s outlook report provides insight into the central bank’s view on inflation and economic conditions which are the key factors that influence the monetary policy decision.

#17: UK Construction PMI (11/02/2016 Wednesday 9:30 GMT)

The Markit/CIPS construction PMI for September rebounded to the growth side in September after declining for several months in a row. The index stood at 52.3 and came in above the analysts expectation of 49. Forecast for October: 51.9

#18: US ADP Non-Farm Employment Change (11/02/2016 Wednesday 12:15 GMT)

The private sector in the U.S. added as many as 154,000 jobs last month, but missed analysts’ expectation that 166,000 jobs will be added. For the month of August, the reading was revised downward to 175,000 from the previously reported figure of 177,000. It is expected that the report for October would show a gain of 166,000 jobs.

#19: US Crude Oil Inventories (11/02/2016 Wednesday 14:30 GMT)

Crude oil stocks in the US declined by as many as 600,000 barrels last week after they rose by 4.9 million barrels in the prior week. Analysts’ expectation was that stocks would rise by 700,000 barrels. Further, the crude oil price rise period, after the OPEC members decided to limit production, has come to end.

#20: FOMC Rate Decision/Statement (11/02/2016 Wednesday 18:00 GMT)

Policymakers at the Federal Reserve kept rates steady in September even though they expressed confidence economic growth in the US. The Fed had said that it waiting for further evidence as regards continued progress towards achieving its objectives. However, the committee reduced its economic growth and inflation expectations for this year even though the labor market continues to remain strong. The Brexit and China’s slowdown continue to worry the members. The FOMC statement is also scheduled to be released at the same time. The Fed is expected to keep the rate steady at 0.50 percent during the current meeting as well.

#21: Australia Trade Balance (11/03/2016 Thursday 00:30 GMT)

The Australian Bureau of Statistics reported that the trade deficit in August was A$ 2.01 billion, down 5.0 percent from July’s deficit which was revised downward to A$2.12 billion. The reading for August, the smallest deficit since April, came in below market expectation of a deficit of A$ 2.30 billion.

#22: UK Services PMI (11/03/2016 Thursday 9:30 GMT)

In September, the Markit/CIPS Services PMI edged lower to 52.6 from 52.9 in the previous month. However, the reading beat the market expectation of a reading of 52. It is expected that the Services PMI will come in at 52.5 in October.

#23: UK Central Bank Inflation Report (11/03/2016 Thursday 12:00 GMT)

The inflation report, released every quarter by the Bank of England, provides the central bank’s projection as regards economic growth and inflation over the next two years. A press conference is also held subsequently to discuss the contents of the report.

#24: UK Interest Rate Decision/Monetary Policy Summary/MPC Official Bank Rate Votes (11/03/2016 Thursday 12:00 GMT)

The UK’s central bank left the interest rate unchanged at 0.25 percent and it said that there is room for further cut in the coming months. Economic forecasts for November remain unchanged, indicating that the UK economy has overcome the referendum challenges. The Bank of England is unlikely to change the interest rate during this meeting. A summary of the monetary policy meeting is also scheduled to be released at the same time. Further, the MPC Official Bank Rate Votes is expected to be the same as last time, which is 0-0-9.

#25: US Unemployment Claims (11/03/2016 Thursday 12:30 GT)

The number of people in America filing for unemployment benefits fell by 3,000 to 258,000 last week. Analysts expected the reading to reach 261,000. The moving average for four weeks was 253,000, representing an increase of 1,000 from the reading for the previous week.

#26: US ISM Non-Manufacturing PMI (11/03/2016 Thursday 14:00 GMT)

Activity in the service-sector rose to 57.1 in September, the highest reading in about 12 months, from 51.4 recorded in August. This indicated steady growth for one of the key sectors of the economy. Analysts expected the index to come in at 53.1 in September. The better-than-expected data may reduce concerns that the economy is slowing down after recording moderate growth last year. The ISM non-manufacturing PMI is expected to continue to expand and reach 56.2 in October.

#27: Australia RBA Monetary Policy Statement (11/04/2016 Friday 00:30 GMT)

The Reserve Bank of Australia releases the monetary policy statement on a quarterly basis. The statement provides insight into the current status of inflation and the central bank’s views on the country’s economic conditions. These are the key factors that will help to decide the monetary policy decisions in the future.

#28: Australia Retail Sales (11/04/2016 Friday 00:30 GMT)

In Australia, retail sales grew by 0.4 percent in August compared to the flat reading reported in July. The reading for August, the highest since January, beat market expectation of a 0.2 percent increase. Forecast for September: 0.4 percent growth

#29: Canada Central Bank Governor Poloz Speaks (11/04/2016 Friday 00:35 GMT)

Bank of Canada Governor Stephen Poloz is scheduled to speak at the Oshawa Walk of Fame. Volatility can be expected as traders may look for interest rate clues.

#30: Canada Employment Change/Unemployment Rate (11/04/2016 Friday 12:30 GMT)

In September, the Canadian employment market added as many as 67,000 jobs, against a meager employment growth expected by analysts, recording the biggest employment growth in four years. However, the growth was mainly driven by self-employment and part-time work. On the other hand, the unemployment rate was steady at 7 percent. The Canadian economy had recorded robust job creation in the month of August as well. For the month of October, economists expect that the jobs market will contract by 10,000 and the unemployment rate would continue at 7%.

#31: US Non-Farm Payrolls Employment Change/Unemployment Rate/ Average hourly Earnings (11/04/2016 Friday 12:30 GMT)

In the US, the increase in job creation was less than expected in September. Non-farm payrolls increased by 156,000 and the unemployment rate rose to 5 percent. Economists expected that there will be a gain of 171,000 jobs and the jobless rate would be at 4.9 percent. Forecast for October: addition of 175,000 jobs and unemployment rate 4.9 percent.

Average hourly earnings in the US rose by 0.2 percent in September. Forecast for October: an increase of 0.3 percent.

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