Forex Market Outlook For The Week November 26 – 30, 2018

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Last week, the U.S. dollar gained some strength around Thanksgiving. The risk-off sentiment was quite evident throughout the week. Globally, stock markets fell and crude oil prices declined sharply once again. These moves were definitely not one-sided but proved beneficial to both the greenback and the Japanese yen. British Prime Minister Theresa May just about survived a challenge posed on her leadership. However, it seems as though she does not have the required majority to find support for her Brexit deal in parliament. She is scheduled to face the European leaders on Sunday in the European Union Summit. Meanwhile, the European Commission has rejected Italy’s budget once again. This weighed down the euro.

The upcoming week is a busy week with the minutes of FOMC meeting, U.S. GDP data, and two key summits scheduled to happen. Here is an outlook on a few key releases:

#1: EU Economic Summit (11/25/2018 All Day)

forex market outlookThe U.K. and the European Union have reached an agreement as regards Britain’s exit from the EU. This is expected to be signed by all countries. Meanwhile, the uncertainty related to future political relationship continues to be a matter of concern. Both the sides are expected to negotiate various aspects such as the status of Gibraltar. This has infuriated Spain. The British PM Theresa May might try to bag some small wins to gain more support before going to the parliament in early December. It is expected that the headlines from the European Union Summit will set the tone for the stock and currency markets in the coming week. Brexiteers’ reactions in Britain are also expected to influence the market.

#2: New Zealand Retail Sales (11/25/2018 Sunday 21:45 GMT)

In New Zealand, retail trade increased 1.1 percent in the June quarter after the reading for the prior quarter was revised upward to an increase of 0.3 percent. The reading for the June quarter easily beat analysts’ expectations for a 0.4 percent gain. The sales of buildings, garden supplies, and hardware rose the highest and were followed by sales at electrical and electronic goods stores, department stores, and food and beverage outlets. On the other hand, sales dropped at grocery stores and supermarkets. Fuel trade declined fell for the fourth consecutive quarter. On a year-on-year basis, retail trade grew 3.1 percent in the June quarter, following the 2.8 percent increase in the prior quarter. Forecast for the third quarter: retail sales are expected to increase by 1.0 percent

#3: Australia RBA Governor Philip Lowe Speaks (11/25/2018 Sunday 22:15 GMT)

Philip Lowe, Governor of the Reserve Bank of Australia, is scheduled to deliver a speech on the subject “A Journey Towards a Near Cashless Payments System” in Sydney at the Australian Payment Summit. The audience is expected to ask questions.

Markets often turn volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates.

#4: Euro Area ECB President Mario Draghi Speaks (11/26/2018 Monday 14:00 GMT)

Mario Draghi, President of the European Central Bank, is scheduled to testify before the European Parliament Economic and Monetary Affairs Committee about monetary policy and the economy in Brussels.

Markets often turn volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates.

#5: U.K. BoE Governor Mark Carney Speaks (11/26/2018 Monday 18:30 GMT)

Mark Carney, Governor of the Bank of England, is scheduled to discuss Alan Greenspan’s and Adrian Wooldridge’s new book “Capitalism in America: A History” in London at the Policy Exchange event.

Markets often turn volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates.

#6: U.S. Conference Board Consumer Confidence (11/27/2018 Tuesday 15:00 GMT)

The Consumer Confidence Index, reported by the Conference Board in the U.S., rose again in October, following the modest improvement recorded in September. Currently, the Index stands at the 137.9 level, up from the 135.3 level in September. While the Present Situation Index improved to the 172.8 level from the 169.4 level, the Expectations Index rose to the 114.6 level from the 112.5 level.

#7: New Zealand RBNZ Financial Stability Report (11/27/2018 Tuesday 20:00 GMT)

The Reserve Bank of New Zealand releases the Financial Stability Report twice every year. The latest report released on May 20, 2018, showed that the financial system in New Zealand is sound as well as efficient. The report noted that the biggest risks to the financial system in New Zealand have not seen any material change over the previous six months and that the system is resilient. However, the report added that the conduct and culture of financial firms should support public confidence.

#8: New Zealand RBNZ Gov Orr Speaks (11/27/2018 Tuesday 22:00 GMT)

Adrian Orr, Governor of the Reserve Bank of New Zealand, is scheduled to hold a press conference in Wellington to talk about the Financial Stability Report.

Markets often turn volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates.

#9: New Zealand RBNZ Gov Orr Speaks (11/28/2018 Wednesday 00:00 GMT)

Adrian Orr, Governor of the Reserve Bank of New Zealand, is scheduled to testify before the Parliament Select Committee in Wellington about the Financial Stability Report.

Markets often turn volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates.

#10: U.S. Preliminary GDP (11/28/2018 Wednesday 13:30 GMT)

The American economy grew at an annualized rate of 3.5 percent on a quarter-on-quarter basis in the September quarter of this year, according to the advance estimate. The reading for the period beat analysts’ expectations for a growth of 3.3 percent. In the previous quarter, the U.S. economy had expanded 4.2 percent, the highest expansion ever since the September quarter of 2014. The real GDP increase for the third quarter of this year reflected positive contributions from private inventory investment, personal consumption expenditures, local and state government spending, nonresidential fixed investment, and federal government spending. Negative contributions came from residential fixed investment and exports. The second estimate is expected to come in slightly higher at 3.6 percent.

#11: U.S. Fed Chair Jerome Powell Speaks (11/28/2018 Wednesday 17:00 GMT)

Jerome Powell, Fed Chair, is scheduled to deliver a speech on the subject “The Federal Reserve’s Framework for Monitoring Financial Stability” in New York at The Economic Club.

Markets often turn volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates.

#12: New Zealand ANZ Business Confidence (11/29/2018 Thursday 00:00 GMT)

In New Zealand, the ANZ Business Confidence Index rose marginally to the -37.1 level in October from the decade low level of -38.3 recorded in the previous month. The expectations for an increase in employment, easing of credit, investment, and pricing improved. On the other hand, the activity outlook and exports declined.

Among sectors, there was a sharp reduction in residential constructions, while commercial construction showed a visible deterioration. Apart from the decrease in construction intentions, most other indicators remained little changed in the month of October. This shows that the business sentiment cannot be considered as a tailwind for the economy at the moment, but optimism prevails because of the boost provided by the strength in the labor market, high commodity prices, the fiscal boost, and the weakness of the NZD.

#13: Australia Private Capital Expenditure (11/29/2018 Thursday 00:30 GMT)

In Australia, private capital expenditure declined by 2.5 percent on a quarter-on-quarter basis in the second quarter of this year after the reading for the prior period was revised upward to represent a growth of 1.2 percent. The reading for the second quarter missed analysts’ expectations for an increase of 0.6 percent in private capital expenditure. Since the December quarter of 2016 private capital expenditure declined for the first time as expenditure on plant, equipment, and machinery declined and expenditure on structure and buildings dropped. Forecast for the third quarter: an increase of 1.1 percent is on the cards

#14: Euro Area ECB President Mario Draghi Speaks (11/29/2018 Thursday 08:00 GMT)

Mario Draghi, President of the European Central Bank, is scheduled to speak on International Macroeconomics and Finance in Frankfurt at the Global Research Forum meeting.

Markets often turn volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates.

#15: U.S. FOMC Meeting Minutes (11/29/2018 Thursday 19:00 GMT)

In November, the Fed decided not to change the interest rates as was broadly expected by the market. Fed Chair Jerome Powell and other members made only some minor tweaks to the minutes. The most notable change was the downgrading of their assessment related to business investment. The minutes of the meeting is expected to shed some light on the central bank’s concern about the slowdown. Moreover, it presents an opportunity to provide some hint about a rate hike in December. Several Fed officials have expressed a concern about the global slowdown and some are against raising rates in November.

#16: Canada GDP (11/30/2018 Friday 13:30 GMT)

The Canadian economy grew 0.1 percent on a month-over-month basis in August. It was below the 0.2 percent growth reported in July. However, it was better than analysts’ expectations for a flat reading. Growth was seen in the oil and gas extraction and insurance and finance sectors. However, growth declined in more than 12 of the 20 industrial sectors.

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