The greenback was pulled on either side by Trump’s troubles and the Fed’s hawkishness. Trade tariff issues also played a key role. Last week, President Trump was in the limelight as he criticized the Fed again for raising the interest rates. He expressed disappointment by commenting that the Fed Chair Powell did not believe in “cheap debt”. Further, traders also focused on his legal troubles. His former personal solicitor testified against him. He said that Trump had instructed him to pay money to hush lovers for the purpose of influencing the campaign. These developments weighed down the US Dollar.
Meanwhile, the upbeat FOMC Minutes signaled an interest rate hike. In a speech at Jackson Hole on Friday, Fed Chair Powell noted that there is no indication of the inflation accelerating or the getting overheated. Additionally, the U.S. went ahead and imposed the tariffs on Chinese goods worth $16 billion as planned in spite of ongoing talks. China retaliated by imposing tariffs on American goods. These developments, however, helped the greenback to regain strength.
In the U.K., the Brexit talks will now be carried on continuously. The British pound gained following this development. The Australian dollar lost ground because of the Australian PM Turnbull’s troubles. However, the Canadian dollar continued to enjoy NAFTA optimism which helped the economy overcome weak retail trade.
In a lean week, the second estimate of US GDP data stands out. Here is an outlook on key releases for the upcoming week:
#1: U.S. GDP (08/29/2018 Wednesday 12:30 GMT)
In the second quarter of this year, the U.S. economy expanded 4.1 percent on an annualized basis, according to the preliminary estimate. The figure for the quarter came in well above the previous quarter’s reading which was revised upward to represent a growth of 2.2 percent. The GDP reading for the second quarter was in line with analysts’ expectations. This is by far the strongest growth rate ever since the September quarter of 2014. The growth was driven by higher soybean exports and consumer spending. However, business spending slowed down. In the second GDP estimate, the figure is expected to be slightly downgraded to 4.0 percent.
#2: U.S. Crude Oil Stocks Change (08/29/2018 Wednesday 14:30 GMT)
In the U.S., the crude oil stocks fell 5.836 million barrels during the week that ended on August 17 after the 6.805 million barrels increase was reported in the prior week. The decline in crude stocks was much higher than analysts’ expectation for a 1.497 million barrels decrease. Gasoline stocks, on the other hand, rose by 1.2 million barrels against analysts’ expectations for a 0.488 million barrels decline.
#3: New Zealand ANZ Business Confidence (08/30/2018 Thursday 01:00 GMT)
The business outlook survey carried out by ANZ in July showed that a net 44.9 percent of the businesses were pessimistic as regards the economy’s general outlook. This is by far the most downbeat figure in the monthly business confidence survey ever since May 2008, when the country was in recession with the global financial crisis building up. The number of businesses that expect an improvement in the business activity was more positive but declined to a net 4.0 percent. This is the lowest reading ever since May 2009. Sharon Zollner, the ANZ chief economist, said that the survey paints a very unhappy picture and that it was not possible to take a ‘glass half full’ approach to it. In general, business confidence has been sliding ever since around the general election in 2017. Economists point to several issues, ranging from tensions in global trade to uncertainty as regards the new Government policies.
#4: Australia Private Capital Expenditure (08/30/2018 Thursday 01:30 GMT)
In Australia, private capital expenditure increased 0.4 percent on a quarter-on-quarter basis in the first quarter of this year after the figure for the prior quarter was revised upward to represent a growth of 0.2 percent. Analysts had expected private capital expenditure to increase by 0.8 percent. While the expenditure on plant, machinery, and equipment, rose at a faster rate, the expenditure on buildings and structures continued to decline. On a year-on-year basis, private capital expenditure rose by 3.7 percent in the first quarter. Forecast for the second quarter of 2018: an increase of 0.6 percent
#5: Canada GDP (08/30/2018 Thursday 12:30 GMT)
The Canadian economy advanced 0.5 percent on a month-over-month basis in the month of May this year after it grew by 0.1 percent in April. Analysts had expected the GDP to grow by 0.4 percent. This was the strongest growth ever since the 0.2 percent contraction reported in January. The goods-purchasing industries recorded growth. This included the manufacturing, quarrying, mining, and oil and gas extraction sectors. Meanwhile, the utility sector declined. The service-producing industries recorded a growth of 0.5 percent, boosted by all-round increases, after remaining flat in April.