Forex Market Outlook For The Week November 12 – 16, 2018

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The greenback came on top last week amid a great deal of turbulence. A divided U.S. government in the mid-term elections, the Fed decision, and the developments related to Brexit, among others contributed to the turbulence. While the Republicans retained the Senate and the Democrats won the House. The greenback lost some ground against major currencies following some amount of volatility. However, the movement remained limited. In the U.S., the ISM Manufacturing PMI reading came in better than analysts’ expectations and indicated robust growth. Meanwhile, in the U.K., reports that a Brexit deal is imminent helped the pound make some gains but the absence of any real progress weighed down the British pound. Further, the crisis in Italy continued to engulf the euro and crude oil prices tumbled because of higher production in the United States.

The key releases scheduled for the upcoming week include inflation and retail trade data from the U.S. There are other key releases from elsewhere in the world as well. Here is an outlook on some of the key releases:

#1: U.K. Average Earnings Index (11/13/2018 Tuesday 09:30 GMT)

forex market outlookIn the U.K., total earnings of workers, including bonuses, rose by 2.7 percent annually to £523 per week during the three-month period to August, up from the 2.6 percent rise reported in the prior period. Analysts’ expectation was that the earnings growth rate would remain steady. Earnings of workers grew in both public and private sectors and financial services sector. However, earnings grew less in wholesaling, retailing, manufacturing, hotels and restaurants, and construction.

Excluding bonuses, earnings grew 3.1 percent to £492 per week, following the 2.9 percent increase in the prior period. The reading for August beat analysts’ expectations for a 2.9 percent increase. This is the fastest increase in workers’ earnings excluding bonuses ever since the three-month period to January.

In real terms, workers’ earnings, including bonuses, rose 0.4 percent, the highest ever since January and earnings excluding bonuses increased by 0.7 percent, recording the sharpest rise ever since December 2016.

Forecast for the three-month period to September: an increase of 3.0 percent is on the cards

#2: Australia Wage Price Index (11/14/2018 Wednesday 00:30 GMT)

In Australia, the Wage Price Index rose 0.6 percent in the second quarter of this year and 2.1 percent annually on a seasonally adjusted basis, according to data released by the Australian Bureau of Statistics. In the private sector, the wage growth in the quarter was 2.0 percent. Forecast for the third quarter: an increase of 0.6 percent is expected

#3: U.K. CPI (11/14/2018 Wednesday 09:30 GMT)

In the U.K., the consumer prices declined to 2.4 percent in the month of September on a year-over-year basis from the 2.7 percent level in August. The reading for the month came in below analysts’ expectations of 2.6 percent. This is the lowest inflation reading over the last three months. Prices dropped because of a slowdown in food, recreation and culture, transport cost and a decline in clothing prices. Forecast for October 2018: 2.5 percent

#4: U.S. CPI and Core CPI (11/14/2018 Wednesday 13:30 GMT)

In the U.S., consumer prices rose by 0.1 percent on a month-over-month basis in September, down from the 0.2 percent level in August. Analysts had expected the CPI to come in at 0.2 percent. The shelter index rose again and contributed more than 50 percent to the monthly increase on a seasonally adjusted basis. While the energy index dropped in September, the food index remained unchanged.

Excluding energy and food, the core consumer prices also rose by 0.1 percent, the same amount as in August. Analysts expected the core CPI reading to come in at 0.2 percent. The indexes for shelter, apparel, motor vehicle insurance, airline fares, medical care, and recreation rose. However, the indexes for new vehicles, trucks, and used cars fell sharply.

Forecast for October 2018: CPI and Core CPI expected to come in at 0.3 percent and 02 percent respectively

#5: U.S. Fed Chair Jerome Powell Speaks (11/14/2018 Wednesday 23:00 GMT)

Jerome Powell, Federal Reserve Chair, and Kaplan, Dallas Fed President, are scheduled to speak on economic issues at an event that is hosted by Dallas Federal Reserve Bank. The audience is expected to ask questions. Markets often remain volatile during such speeches as traders make an attempt to understand the direction of interest rate in the future.

#6: Australia Employment Change and Unemployment Rate (11/15/2018 Thursday 00:30 GMT)
Australia added 5,600 jobs in the month of September to take the number of employed people in the country to 12,636,300,000. While full-time employment rose by 20,300 to 8,654,400, part-time employment dropped 14,700 to the 3,981,900 level. Meanwhile, the unemployment rate fell to the 5.0 percent level in September from the 5.3 percent level in August. This is the lowest jobless level in as many as six-and-a-half years. While the number of unemployed people looking for full-time jobs dropped 38,000 to 449,700, the number of unemployed people looking for part-time jobs rose by 900 to 216,100. The labor force participation rate declined 0.2 percentage points to the 65.4 percent level.

Employment change and unemployment rate forecasts for October 2018: an addition of 20,300 jobs and an unemployment rate of 5.1 percent are expected

#7: U.K. Retail Sales (11/15/2018 Thursday 09:30 GMT)

In the U.K., retail sales fell by 0.8 percent on a month-over-month basis in the month of September after the reading for the prior month was revised upward to a gain of 0.4 percent. However, the reading for September came in worse than analysts’ expectations for a 0.4 percent decline. This is the largest drop in retail trade ever since March. Food purchases fell and sales dropped in petrol stations and other non-food stores. On the other hand, sales increased at clothing stores and household goods stores. Forecast for October 2018: Retail sales are expected to increase by 0.1 percent

#8: U.S. Retail Sales and Core Retail Sales (11/15/2018 Thursday 13:30 GMT)

In the United States, retail sales rose by 0.1 percent on a month-on-month basis in September, the same rate as in the prior month. However, the reading came in well below analysts’ expectations for a 0.6 percent increase. Spending at bars and restaurants declined the most ever since December 2016.

Excluding autos, retail trade dropped 0.10 percent on a month-on-month basis in September after the reading for the prior month was revised downward to an increase of 0.2 percent. Analysts had expected retail sales to rise by 0.4 percent in September.

Forecast for October 2018: Retail sales and core retail are expected to increase by 06 percent and 0.5 percent respectively

#9: U.S. Fed Chair Jerome Powell Speaks (11/15/2018 Thursday 16:30 GMT)

Jerome Powell, Federal Reserve Chair, is scheduled to speak on Hurricane Harvey recovery efforts in Houston at a Dallas Federal Reserve Bank event. Markets often remain volatile during the time of his speeches. This is because traders make an attempt to understand the directions of interest rates in the future.

#10: Euro Zone ECB President Mario Draghi Speaks (11/16/2018 Friday 08:30 GMT)

Mario Draghi, President of the European Central Bank, is scheduled to speak in Frankfurt at the European Banking Congress. Markets often remain volatile during the time of his speeches. This is because traders make an attempt to understand the directions of interest rates in the future.

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