Forex Market Outlook For The Week February 11 – 15, 2019

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Last week, the U.S. dollar continued to recover. Will the greenback continue to gain in the coming week as retail sales and inflation data from the U.S. and U.K. GDP data stand are scheduled to be announced in the upcoming week?

The market mood worsened amid growing worries as regards a global slowdown. The Bank of England and the European Commission lowered its growth forecasts. The U.S. and China have not made any significant progress with respect to trade talks and President Trump said that no meeting has so far been scheduled with the Chinese President Xi.

The Australian dollar lost ground as the RBA said that it is open to cutting interest rates. Meanwhile, the kiwi plunged following an increase in the unemployment rate in New Zealand. However, the Canadian dollar staged a smart recovery following an excellent employment report.

Here is an outlook on some of the key data scheduled for release next week from around the world:

#1: U.K. GDP MoM (02/11/2019 Monday 09:30 GMT)

forex market outlookIn the U.K., the gross domestic product grew 0.2 percent in the month of November last year, following the flat growth recorded in the previous. In October last year, the GDP growth was o.1 percent. Forecast for December 2018: 0.0 percent

#2: U.K. Manufacturing Production (02/11/2019 Monday 09:30 GMT)

In the U.K., manufacturing production declined 0.3 percent in November last year after the reading for the previous month was revised downward to a decline of 0.6 percent in October. On a year-on-year basis, manufacturing production fell 1.1 percent. The reading for the prior month was revised downward to a decline of 0.7 percent. Analysts had expected manufacturing output to decrease by 0.7 percent. Manufacturing production has now declined for two months in a row. Forecast for December 2018: a 0.2 percent increase is on the cards

#3: U.K. Preliminary GDP QoQ (02/11/2019 Monday 09:30 GMT)

The British economy expanded at the rate of 0.6 percent in the three-month period to September last year, recording the strongest growth ever since the final quarter of 2016. In the prior, period the economy had grown by 0.4 percent. Exports and household spending drove growth. Business investment fell for the third consecutive quarter. This has not been the case ever since the financial crisis. This was probably the result of political and economic uncertainty caused by Brexit. Forecast for the final quarter of 2018: 0.3 percent growth is expected

#4: U.K. BOE Governor Mark Carney Speaks (02/12/2019 Tuesday 13:00 GMT)

Mark Carney, Governor of the Bank of England, is scheduled to speak in London on the topic “economic outlook and global trade tensions”. Markets often turn volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates.

#5: U.S. Fed Chair Jerome Powell Speaks (02/12/209 Tuesday 17:45 GMT)

Jerome Powell, Federal Reserve Chair, is scheduled to deliver a talk on the subject “Economic Development in High Poverty Rural Communities” in Mississippi at the Hope Enterprise Corporation Rural Policy Forum. The audience may ask questions. Markets often turn volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates.

#6: New Zealand Official Cash Rate (02/13/2019 Wednesday 01:00 GMT)

In the meeting held in November last year, the Reserve Bank of New Zealand decided to leave the Official Cash Rate unchanged at the current level of 1.75 percent. Policymakers said that the Official Cash Rate is expected to remain at this level all through 2019 and 2020. They also said that the GDP growth is expected to improve over 2019 and indicated that negative sentiment prevailed because of trade tensions. Forecast for February 2019: 1.75 percent

#7: New Zealand RBNZ Monetary Policy Statement (02/13/2019 Wednesday 01:00 GMT)

In the Monetary Policy report, the central bank provides details as to how the inflation target will be achieved and how the monetary policy will be formulated and implemented in the next 5 years since the release of the last statement. It offers valuable insight into the central bank’s view of inflation and economic conditions.

#8: New Zealand RBNZ Rate Statement (02/13/2019 Wednesday 01:00 GMT)

The Reserve Bank of New Zealand uses the Rate Statement as the primary tool to communicate with investors as regards the monetary policy. It provides the outcome of the members’ decision on setting interest rates. It also includes a commentary on the economic conditions that impacted their decision. More importantly, it provides an economic outlook and clues on the direction of interest rates in the future.

#9: New Zealand Inflation Expectations (02/13/2019 Wednesday 02:00 GMT)

The quarterly Inflation Expectations survey conducted by the Reserve Bank of New Zealand in the December quarter of last year showed that business managers expected inflation to come at 2.03 percent in the next 2 years. This figure was little-changed from the 2.04 percent anticipated by the business managers in the prior period. However, the Inflation Expectations for the year 2019 rose to 2.09 percent from the 1.86 percent level for the previous quarter.

#10: New Zealand RBNZ Press Conference (02/13/2019 Wednesday 02:00 GMT)

The Governor of the Reserve Bank of New Zealand holds a press conference after the announcement of the Official Cash Rate. The press conference lasts for about 30 minutes. There are two parts to the press conference. In the first part, the Governor reads out a prepared statement. The second part is for the press to ask questions. Heavy market volatility can be expected as the questions can lead to unscripted answers.

#11: U.K. CPI (02/13/2019 Wednesday 09:30 GMT)

In the U.K., the annual inflation rate edged down to 2.1 percent in the month of December last year from the 2.3 percent level in the prior month. The reading for the month came in line with analysts’ expectations. This was the lowest inflation reading ever since January 2017. Inflation declined mostly because of lower airfares and petrol prices. Forecast for January 2019: Inflation rate is expected to come in at 1.9 percent

#12: U.S. CPI and Core CPI (02/13/2019 Wednesday 13:30 GMT)

In the U.S., the consumer prices declined 0.1 percent on a month-over-month basis in December last year, following the flat reading in the prior month. The reading for the month was in line with analysts’ expectations. The inflation rate edged lower for the first time in nine months. Gasoline index dipped 7.5 percent, offsetting the increases in many indexes including food, shelter, and energy components. The energy index fell 3.5 percent because of the fall in fuel oil and gasoline indexes. However, the indexes for electricity and natural gas increased. The food index rose along with that for shelter, recreation, household furnishings, and medical care. However, the indexes for used cars/trucks, motor vehicle insurance, and airline fares declined. Forecast for January 2019: an increase of 0.1 percent is on the cards

Consumer prices, excluding food and energy, rose by 0.2 in December last year from the previous month. Forecast for January 2019: an increase of 0.2 percent is on the cards

#13: New Zealand RBNZ Governor Orr Speaks (02/13/2019 Wednesday 19:10 GMT)

Adrian Orr, Governor of the Reserve Bank of New Zealand, is scheduled to testify in Wellington about the Monetary Policy Statement in front of the Finance and Expenditure Select Committee. Markets often turn volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates.

#14: U.S. Retail Sales and Core Retail Sales (02/14/2019 Thursday 13:30 GMT)

In the U.S., retail trade increased 0.2 percent on a month-on-month basis in November last year after the reading for the prior month was revised upward to a gain of 1.1 percent. The reading for the month matched with analysts’ expectations. While the sales of furniture, electronics and several other goods rose, gasoline stations recorded a decline in sales because of lower fuel prices.

Core retail sales, which excluding autos, rose by 0.2 percent on a month-over-month basis in November last year, easing from the upwardly revised figure of the 1.0 percent increase in October. The reading for November was in line with analysts’ expectations.

Forecast for December 2018: While the retail trade is expected to increase by 0.1 percent, core retail sales are expected to remain flat

#15: U.S. PPI (02/14/2019 Thursday 13:30 GMT)

In the U.S., producer prices fell by 0.2 percent on a month-on-month basis in December last year, following an increase of 0.1 percent in the previous month. Analysts had expected PPI to decline by 0.1 percent. While wholesale goods cost fell by the same percentage as in the prior month, energy prices declined the most ever since September 2015. The services cost declined 0.1 percent led by a decline in the trade services index. Forecast for January 2019: an increase of 0.1 percent is on the cards

#16: U.K. Retail Sales (02/14/2019 Friday 09:30 GMT)

In the U.K., retail trade fell by 0.9 percent on a month-on-month basis in December last year after the reading for the prior month was revised downwardly to a gain of 1.3 percent. Analysts had expected retail trade to decline by 0.8 percent in December. This was the steepest decline in retail trade ever since May 2017. Non-food sales fell 2.3 percent. Specifically, sales of household goods and other stores fell. Meanwhile, food trade and fuel sales increased.

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