Forex Market Outlook for the Week August 13 – 17, 2018

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The U.S. dollar gained against most world currencies last week amid news related to trade tariffs. America is all set to impose trade tariffs on Chinese goods worth $16 billion on August 23. China is also all set to retaliate. However, the news did not create the kind of impact that was expected by the market. This could be because of the higher amounts of duties scheduled to be imposed in September for $200 billion worth goods.

Meanwhile, U.S. data came in mixed. The PPI missed analysts’ expectations. However, the JOLTs job openings data was encouraging. The U.K. government is expected to meet and negotiate for a no-deal Brexit. This news weighed the British pound down. German data was disappointing. However, the greenback’s ebb and flow moved the EUR/USD pair much more than expected. The Canadian Dollar gained on the back of NAFTA talks but suffered because of the diplomatic spat between Saudi Arabia and Canada. The New Zealand Dollar lost ground amid dovish remarks from the Reserve Bank of New Zealand.

The key releases scheduled for the upcoming week include the retail sales figures from the U.S. and the U.K., housing data from the U.S., the jobs report Australia, and CPI data from the U.K. Here is an outlook on major economic releases from around the world:

#1: U.K. Average Earnings Index (08/14/2018 Tuesday 08:30 GMT)

forex market outlookThe total earnings of U.K. workers, including bonuses, rose by 2.5 percent (annual) to £517 per week during the three months to May, slowing down from the upwardly revised increase of 2.6 percent reported for the previous period. However, the reading for the month was in line with analysts’ expectations. The earnings growth for May was the weakest ever since the three-month period to November last year. Increase in wages in the public, financial services, and manufacturing sectors, was less. However, the wage increase was faster in wholesale, retail, hotels and restaurants, and construction sectors. Excluding bonuses, wages rose by 2.7 percent to £486 per week, following the 2.8 percent increase in the previous period. This was in line with analysts’ expectations. In real terms, wages including and excluding bonuses rose by 0.2 percent and 0.4 percent, respectively. Forecast for June 2018: an increase of 2.5 percent is expected.

#2: Australia Wage Price Index (08/15/2018 Wednesday 01:30 GMT)

The total hourly wage rates of Australian workers, excluding bonuses, rose by 0.5 percent on a seasonally adjusted basis in the March quarter of this year from the previous quarter. The wage growth has been moderate for the past two years. The wages of both the Public and Private sector workers rose by 0.5 percent on a seasonally adjusted basis. The highest increase was in the education and training sector. In several sectors, the wage growth remained low at 0.2 percent. Forecast for the second quarter of 2018: the wage price index is expected to rise by 0.6 percent.

#3: U.K. CPI (08/15/2018 Wednesday 08:30 GMT)

In the U.K., the consumer prices rose 2.4 percent (annual) in the month of June. The reading for the month came in at the same level as that for the previous month and below the analysts’ expectation of 2.6 percent. This is the lowest increase since March last year. Transport, housing, and utility prices increased at a faster rate, while recreation and culture, and food and non-alcoholic beverage prices grew at a slower pace. Forecast for July 2018: consumer prices are expected to increase by 2.5 percent.

#4: U.S. Retail Sales and Core Retail Sales (08/15/2018 Wednesday 12:30 GMT)

In the U.S., retail trade increased 0.5 percent on a month-over-month basis in June after the reading for the previous month was revised upward to an increase of 1.3 percent. The figure for June was in line with analysts’ expectations. In June, the retail trade was driven by increases in motor vehicles and other goods purchases.

Excluding autos, retail trade increased 0.4 percent on a month-over-month basis in June. The reading for May was revised upward to an increase of 1.4 percent. The increase in retail trade in June matched with analysts’ expectations.

Forecast for July 2018: retail sales and core retail sales are expected to increase by 0.2 percent and 0.4 percent respectively

#5: U.S. Crude Oil Stocks Change (08/15/2018 Wednesday 14:30 GMT)

In the U.S., crude oil stocks declined 1.351 million barrels during the week that ended August 3 after the 3.803 million barrels increase in the prior week. Analysts had expected the stocks to decrease by 3.367 million barrels. Meanwhile, gasoline inventory jumped 2.9 million barrels against analysts’ expectation for a decline of 1.433 million barrels.

#6: Australia Employment Change and Unemployment Rate (08/16/2018 Thursday 01:30 GMT)

In Australia, employment rose by 50,900 in June on a seasonally adjusted basis. While full-time employment rose by 41,200, part-time employment rose by 9,700. The unemployment rate remained steady at 5.4 percent, the lowest level ever since November last years, and was in line with analysts’ estimates. The number of unemployed people in Australia declined 1,100. Forecast for July 2018: Australia is expected to add 15,300 jobs and maintain the unemployment rate at the 5.4 percent level.

#7: U.K. Retail Sales (08/16/2018 Thursday 08:30 GMT)

In the U.K., the retail trade declined 0.5 percent in the month of June on a month-on-month basis against analysts’ expectation for a gain of 0.2 percent. The reading for May was revised upward to an increase of 1.4 percent. Retail trade declined because of the fall in non-food stores sales as the heat wave and World Cup kept people away from stores. Forecast for July 2018: an increase of 0.2 percent is on the cards.

#8: U.S. Building Permits (08/16/2018 Thursday 12:30 GMT)

In the U.S., the number of building permits issued fell 0.7 percent on a month-on-month basis in June to an and seasonally adjusted rate of 1,292,000 as per revised data. The number of building permits issued was previously reported to have fallen 2.2 percent to 1,273,000. Forecast for July 2018: About 1,310,000 building permits are expected to be issued.

#9: Australia RBA Governor Philip Lowe Speaks (08/16/2018 Thursday 23:30 GMT)

Philip Lowe, Governor of the Reserve Bank of Australia, is due to testify before the Standing Committee on Economics of the House of Representatives in Canberra. Markets often remain volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates.

#10: Canada CPI (08/17/2018 Friday 12:30 GMT)

In Canada, consumer prices increased 0.10 percent on a month-on-month basis in June.

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