Forex Market Outlook For The Week February 18 – 22, 2019

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Last week, the greenback continued to gain ground in spite of improving sentiment. What’s in store now? The Fed comes back to limelight in the upcoming week with the minutes of the FOMC meeting, among other events. Here is an outlook on some of the key releases:

#1: Australia Monetary Policy Meeting Minutes (02/19/2019 Tuesday 00:30 GMT)

forex market outlookThe Reserve Bank of Australia releases the Monetary Policy Meeting Minutes 11 times in a year two weeks after the announcement of the Cash Rate. It provides a detailed account of the most recent meeting of the Reserve Bank Board. In addition, it offers in-depth information as regards the economic conditions that impacted their decision with respect to setting interest rates.

#2: U.K. Average Earnings Index (02/19/2019 Tuesday 09:30 GMT)

Total earnings of workers in the U.K., including bonuses, rose by 3.4 percent on a yearly basis to £527 per week during the three-month period to November 2018 from the 3.3 percent increase in the previous period. Analysts had expected earnings to increase by 3.3 percent. This is the fastest rise in earnings inclusive of bonuses ever since the three-month period to July 2008. Wages grew in business and financial services sectors but remained unchanged in the private and public sectors and the services sector. Wages increased at a slower rate in construction, wholesaling, retailing, hotels and restaurants, and manufacturing sectors. Excluding bonuses, earnings rose 3.3 percent, the same rate as in the prior period, as analysts expected. In real terms, while earnings including bonuses rose by 1.2 percent, those excluding bonuses increased 1.1 percent. Forecast for the three-month period to December 2018: an increase of 3.5 percent is on the cards

#3: Australia Wage Price Index (02/20/2019 Wednesday 00:30 GMT)

On a seasonally adjusted basis, the Wage Price Index, which represents a total hourly rate of pay excluding bonuses, rose by 0.6 percent on a quarter-on-quarter basis in the September quarter of last year. The reading for the quarter indicated the continuation of a moderate rate of growth in wages over the past four years. Forecast for the December quarter of 2018: an increase of 0.6 percent is on the cards

#4: U.S. FOMC Meeting Minutes (02/20/2019 Wednesday 19:00 GMT)

In the meeting in January, the Federal Reserve decided not to change the interest rates and also indicated a significant change in policy to observe “patience” instead of the prejudice to raising interest rates. The US Fed also kept the possibility of changing the balance sheet reduction program open. The minutes from the most recent meeting will provide more information as to how worried the Fed Chair Jerome Powell and his colleagues are about the economic situation not only in the US but also in other countries. Comments related to the seriousness of the discussion about the balance sheet reduction will likely impact stocks. Further, the comments related to inflation will be of great interest to the U.S. Dollar.

#5: Australia Employment Change and Unemployment Rate (02/21/2019 Thursday 00:30 GMT)

Australia added 21,597 jobs in December last year and the unemployment rate edged down to the 5.0 percent level on a seasonally adjusted basis. This matched with the 6.5 year-low reported in the months of September and October. Further, the reading came in below analysts’ expectations of the 5.1 percent level. Forecast for January 2019: while Australia is expected to add15,200 jobs, the unemployment rate is anticipated to remain at the same 5.0 percent level

#6: Germany Flash Services PMI (02/21/2019 Thursday 08:30 GMT)

In Germany, the IHS Markit Services PMI was revised downward to the 53 levels in the month of January of 2019 from the preliminary reading of 53.1. However, the index remained above the 51.8 level reported in December last year but is the second-lowest reading in the last eight months. The reading also stood below the average level of 54.2 reported since the starting of the current upturn in mid-2013.

The increase in new business was marginal and it came in at the slowest pace for the three-and-a-half year period. This is mainly due to a decrease in new work received from overseas amid increasing uncertainty. Further, work backlogs dropped the most ever since May 2016. Employment remained solid even though it has eased slightly for four months in a row now. Input charges rose the most ever since March 2011, partially because of wage pressures. Output prices also increased. Finally, optimism remained slightly stronger in the month of January, even though confidence continued to be at the second-weakest level in more than two years. This can be attributed to concerns as regards an economic slowdown, Brexit and the lack of availability of a suitable candidate. Forecast for February 2019: 52.8

#7: U.S. Core Durable Goods Orders (02/21/2019 Thursday 13:30 GMT)

In the U.S., new orders for durable goods manufactured in the country, excluding transportation items, fell 0.4 percent on a month-on-month basis in November last year after the reading for the prior month was revised upward to an increase of 0.4 percent. Forecast for December 2018: an increase of 0.2 percent is on the cards

#8: Canada BoC Governor Stephen Poloz Speaks (02/21/2019 Thursday 17:35 GMT)

Stephen Poloz, Governor of the Bank of Canada, is scheduled to speak at the Chamber of Commerce of Metropolitan Montreal on the topic of monetary policy. The text of his speech will be released at the listed time. The speech will be delivered after 15 minutes of the release of the text. Markets often turn volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates in the future.

#9: Australia RBA Governor Philip Lowe Speaks (02/21/2019 Thursday 22:30 GMT)

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

#10: Canada Core Retail Sales (02/22/2019 Friday 13:30 GMT)

In Canada, retail sales, excluding autos, dropped 0.6 percent in November last year after the reading for the previous month was revised downward to 0.2 percent. Analysts had expected a 0.4 percent decline. Forecast for December 2018: a 0.5 percent decline is on the cards

#11: Euro Area ECB President Mario Draghi Speaks (02/22/2019 Friday 15:30 GMT)

Mario Draghi, President of the European Central Bank, is scheduled to speak at a function where he accepts the University of Bologna’s honorary degree. Markets often turn volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates in the future.

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