Forex Market Outlook For The Week August 12 – 16, 2019

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The US dollar declined sharply last week as the expectations of rate cut by the Fed rose amid heightened uncertainty related to the trade war uncertainty. The selling pressure experienced by the greenback would accelerate if economic data such as retail sales, consumer sentiment readings, and CPI disappoint. The Chair Jerome Powell talked down the rate cut in July calling it a “mid-cycle adjustment” in the press conference, but the FOMC statement said that the central bank would do what is required for sustaining expansion.

In the upcoming week, the US is scheduled to publish high-impact data such as inflation rate and retail sales. Other important releases from elsewhere in the world include wage growth, inflation, and retail sales data from the U.K.; and employment and wage price index figures from Australia. Having said that here is an outlook on some of the key data scheduled to be released next week:

#1: U.K. Average Earnings Index (08/13/2019 Tuesday 18:30 GMT)

forex market outlookThe total earnings of workers in the United Kingdom, including bonuses, rose an annualized 3.4 percent during the three-month period to May after the reading for the prior period was revised upward to an increase of 3.2 percent. The reading for May came in higher than analysts’ expectations for a 3.1 percent increase. Wages advanced in the public, private, services, finance and business services, manufacturing, and construction sectors. However, wages growth eased in sectors such as retailing, wholesaling, and hotels and restaurants.

Excluding bonuses, earnings rose by 3.6 percent. This is the strongest growth in wages ever since the three-month period to July last year, following the 3.4 percent increase in the previous three-month period. The reading for the month beat analysts’ expectations for an increase of 3.5 percent.

In real terms, wages including bonuses rose by 1.7 percent and earnings excluding bonuses increase by 1.4 percent.

Forecast for three-month period to June 2019: Earnings including bonuses is expected to grow by an annualized 3.4 percent

#2: U.S. CPI and Core CPI (08/13/2019 Tuesday 22:00 GMT)

In the United States, consumer prices increased by 0.1 percent on a month-on-month basis in June, the same rate as in the previous month. However, the figure for the month came in below analysts’ expectations for a 0.2 percent gain. The food index remained unchanged, but the energy index dropped by 2.3 percent. Additional upward thrust was provided by the shelter, used trucks and cars, and apparel sectors. The indexes for medical care, motor vehicle insurance, and household operations and furnishings also registered gains. However, prices declined in recreation, personal care, and airline sectors. Core consumer prices rose by 0.3 percent, above analysts’ expectations for a 0.2 percent gain. This is the largest increase in core consumer prices since January last year.

Forecast for July 2019: CPI and Core CPI are expected to increase by 0.3 percent and 0.2 percent respectively

#3: Australia Wage Price Index (08/14/2019 Wednesday 11:00 GMT)

In Australia, the Wage Price Index rose by 0.5 percent on a seasonally adjusted basis in the first quarter of this year and 2.3 percent on a year-on-year basis. While the wage growth in the private sector was 0.5 per cent, in the public sector it came in at 0.4 percent.

Forecast for the June quarter 2019: Wage Price Index is expected to increase by 0.5 percent

#4: U.K. CPI (08/14/2019 Wednesday 18:00 GMT)

In the United Kingdom, the annual inflation rate came in at 2.0 percent in June. The reading for the month remained unchanged from the prior month. However, it matched with analysts’ expectations. While the cost of non-alcoholic beverages and food rose further, the prices slowed down for transport as well as housing and utilities. Core inflation – which excludes energy, food, tobacco, and alcohol – increased to the 1.8 percent level from the more than 2-year low level of 1.7 percent registered in May.

CPI forecast for July 2019: 1.9 percent

#5: Australia Employment Change and Unemployment Rate (08/15/2019 Thursday 11:00 GMT)

In Australia, employment rose by 500 to 12.87 million in the month of June. The figure for the month was far below analysts’ expectations for a gain of 10,000 jobs. The reading for the prior month was revised upward to 45,300. While 21,100 full-time jobs were jobs were added, the economy lost as many as 20,600 part-time jobs.

On a seasonally adjusted basis, the unemployment rate in Australia remained unchanged at the 5.2 percent level in June. The jobless rate has remained at this highest level ever since August 2018. The jobless rate for June matched with analysts’ expectations.

Forecast for July 2019: Australia is expected to add 14,200 jobs, but the unemployment rate will remain at the 5.2 percent level

#6: U.K. Retail Sales (08/15/2019 Thursday 18:00 GMT)

In the United Kingdom, retail trade increased by 1.0 percent on a month-on-month basis in June after the figure for the prior month was revised upward to a decline of 0.6 percent. The reading for June beat analysts’ expectations for a decline of 0.3 percent. The increase in retail trade was boosted by sales at non-food stores which were driven higher by increased sales at other stores, household goods stores, and textile, footwear, and clothing stores. Additionally, sales of automotive fuel jumped 2.1 percent. Food sales edged higher by 0.2 percent.

Forecast for July 2019: Retail trade is expected to decline by 0.3 percent

#7: U.S. Retail Sales and Core Retail Sales (08/15/2019 Thursday 22:00 GMT)

In the United States, retail trade increased by 0.4 percent on a month-on-month basis in June, maintaining the same rate as in the prior month. Analysts had expected the retail sales to increase by 0.1 percent. The retail trade was boosted by motor vehicle purchases and buying of various other goods.

Core retail sales or retail sales excluding autos rose by 0.4 percent in June. The rate of increase was the same as that in the previous month. Analysts had expected core retail sales to increase by 0.1 percent.

Forecast for July 2019: Retail sales and core retail sales are expected to increase by 0.3 percent and 04 percent respectively

#8: U.S. Philly Fed Manufacturing Index (08/15/2019 Thursday 22:00 GMT)

In the U.S., the Philly Fed Manufacturing index which indicates the level of current general activity zoomed by 21.5 points on a month-on-month basis to the 21.8 level in July, the highest reading in a year. The reading for July beat analysts’ expectations by 5.0. Shipments and new orders increased at a faster rate. Employment registered the strongest growth ever since October 2017. Further, the average workweek index touched a 14-month high.

The prices paid and received indexes increased in July, but remained much below their figures for the last few years. Looking forward, optimism as regards growth during the next 6 months rose to its highest level since May 2018.

Forecast for August 2019: The index is expected to come in at the 10.1 level

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