Last week, the U.S. dollar staged a recovery. The impressive gains recorded by the greenback can be attributed to better data, and political calm, among other things. However, it remains to be seen whether this is just a correction or a complete change of trend. The fact that the Irma did not cause a great deal of damage to Florida also contributed to the gains registered by the U.S. dollar. Further, the recovery was also supported by the bipartisan agreements signed in Washington and short covering by investors. The yen and the euro lost big time and the commodity currencies saw some weakness. Meanwhile, the pound registered some handsome gains because of better inflation data and hawkish comments from the Bank of England.
The highly anticipated rate decision by the Fed and Japan’s interest rate announcement are among some of the key releases scheduled for next week: Here is an outlook on the major economic events for the upcoming week:
#1: Australia Monetary Policy Meeting Minutes (09/19/2017 Tuesday 1:30 GMT)
The Reserve Bank of Australia decided to leave the official cash rate at the record low level of 1.5 percent during the monetary policy meeting held on September 5. The decision was in line with the analysts’ expectations. According to the policymakers, the economy will pick up gradually during the course of the coming year because of the improved outlook for the non-mining sector and inflation is expected to rise with the strengthening of the economy.
Two weeks after the interest rate decision, the Australian central bank releases the monetary policy meeting minutes. It provides a detailed account of the Reserve Bank Board’s assessment of the prevailing economic conditions that influenced the interest rate decision. Traders look for information on the direction of interest rate in the future.
#2: U.S. Building Permits (09/19/2017 Tuesday 12:30 GMT)
In the U.S., the number of building permits issued in July declined 3.5 percent to an annualized rate of 1,230,000 on a seasonally adjusted basis, according to revised estimates. Initially, it was estimated that there was a 4.1 percent fall in building permits. A significant correlation exists between the economy and the housing sector. Forecast for August: 1,220,000
#3: U.K. Retail Sales (09/20/2017 Wednesday 8:30 GMT)
In the U.K., retail sales rose by 0.3 percent on a month-over-month basis in July. The increase in retail sales for the month of June was also 0.3 percent after it was revised downward from the figure mentioned in the previous report. However, the reading for July came in slightly above analysts expectation of 0.2 percent gain. While the sales of food items and household goods increased, sales declined for the remaining categories. Forecast for August: 0.2 percent increase
#4: U.S. Crude Oil Stocks Change (09/20/2017 Wednesday 14:30 GMT)
Crude oil stocks in the United States of America rose by 5.888 million barrels during the week that ended on September after registering an increase of 4.58 million barrels in the prior period. The market had expected crude oil stocks to increase by 3.238 million barrels. This is the largest gain in inventories in as many as six months. Gasoline stocks declined by 8.428 million barrels though analysts expected a decline of 2.05 million barrels only. This is the decline in gasoline stocks ever. Crude oil stocks change forecast for the next period:
#5: U.S. FOMC Economic Projections (09/20/2017 Wednesday 18:00 GMT)
In June, the Federal Open Markets Committee (FOMC) raised its benchmark interest rate by 25 basis points to the range of 1.0 percent to 1.25 percent as the market expected. A summary of the economic projections that were simultaneously released noted that the Fed expects a real GDP growth 2.1 percent to 2.2 percent in 2017 compared to outlook of 2.0 percent to 2.2 percent provided earlier. The Fed also revised the unemployment rate projection from 4.5 percent to 4.6 percent to 4.2 to 4.3 percent this year. As regards inflation, the Fed said that core PCE would be in the range of 1.6 percent to 1.7 percent and not in the range of 1.8 percent to 1.9 percent as expected earlier. In addition to FOMC’s inflation and economic growth projection for the next two years, the report, released four times in a year, provides a breakdown of each of the FOMC member’s forecast on the interest rate.
#6: U.S. FOMC Statement (09/20/2017 Wednesday 18:00 GMT)
The Fed releases this statement eight times in a year. The FOMC often incorporates slight changes to the statement each time. Traders focus on these changes to formulate their investment decisions. The U.S. FOMC uses this statement to communicate to investors as regards the monetary policy decision. In addition to providing details about the outcome of the members’ vote on interest rate and other policy measures, the statement also includes a commentary on the economic situation that influenced the members’ decision. More importantly, the statement discusses the country’s economic outlook and provides clues on the direction of interest rates in the future.
#7: U.S. FOMC Federal Funds Rate (09/20/2017 Wednesday 18:00 GMT)
The Federal Reserve decided to leave the Federal Funds rate target range unchanged at 1.0 percent to 1.25 percent during the last meeting in July. The Fed also said that it would start reducing the US$4.5 trillion portfolios as early as possible.
In the meeting in September, the Fed may announce the start of quantitative tightening or reduction of the US$4.5 trillion dollar balance sheet. The market would focus on when the Fed will announce the next interest rate hike. The question is whether the interest rate will be hiked in December or not. Forecast for September: 1.0 percent to 1.25 percent
#8: U.S. FOMC Press Conference (09/20/2017 Wednesday 18:30 GMT)
The FOMC holds a press conference (four times in a year) 30 minutes after the announcement of the Federal funds rate. The press conference lasts for about an hour and has two parts: the reading of a prepared statement and open questions by the press. Reporters are likely to press her to reveal as to when the next rate hike will be implemented. Markets often remain volatile during this period.
#9: Bank of Japan Monetary Policy Statement (09/21/2017 Thursday 3:00 GMT)
The Bank of Japan releases monetary policy statements eight times every year. It is one of the primary tools that the central bank makes use of for communicating with the investors as regards the monetary policy. In addition to providing the outcome of members’ decision on the interest rate, asset purchases and a commentary on the economic situation that influenced the interest rate decision, the statement gives a projection of the economic situation in the future and offers clues on the direction of rates in the future.
#10: Bank of Japan Policy Rate (09/21/2017 Thursday 3:00 GMT)
The Japanese central bank decided to leave the key short-term interest rate at the -0.1 percent level during the meeting in July as was widely expected. Further, the policymakers also decided to keep the target yield of the 10-year government bond at about zero percent. However, they pushed back the time for achieving 2.0 percent inflation target once again to 2019 fiscal year. The Bank of Japan has postponed the timeframe for achieving the target inflation rate as many as six times after the launch of the large-scale asset-buying program four years back by Governor Kuroda. Meanwhile, the central bank noted in one of its quarterly forecast reviews that the recent developments on the prices front have been relatively weak, meaning the price rises have been limited at the start of this fiscal year. Interest rate forecast for September: -0.1 percent
#11: Bank of Japan Press Conference (09/21/2017 Thursday 6:30 GMT)
The Bank of Japan holds press conferences eight times in a year. In the press conference, the central bank provides information on the factors that impacted the most recent policy rate decision, outlook on economic growth, inflation, and clues on the direction of the monetary policy in the future.
#12: U.S. Unemployment Claims (09/21/2017 Thursday 12:30 GMT)
The number of American people filing for jobless benefits unexpectedly declined by 14,000 to 284,000 during the week that ended on September 9. The reading came in well below the analysts’ expectation of 300,000 claims. The four-week moving average which eliminates weekly volatility rose by 13,000 to 263,250 to hit the highest level in more than a year. Forecast for the next period: 300,000 claims
#13: Canada CPI (09/22/2017 Friday 12:30 GMT)
In Canada, the annual inflation rate gained steam in July after it slowed to nearly a two-year low in the prior month. The consumer price index rose 1.2 percent from a year ago, according to Statistics Canada. In June, the CPI had advanced 1.0 percent. The July’s advance was as expected by the market. On a month-on-month basis, the CPI remained unchanged in July. Forecast for August on month-on-month basis: 0.2 percent increase
#14: Canada Core Retail Sales (09/22/2017 Friday 12:30 GMT)
In Canada, retail sales rose by 0.1 percent on a month-over-month basis in June compared to that for May which was revised downward to an increase of 0.5 percent. The reading for June also came in below analysts’ expectations for an increase of 0.3 percent. This is the lowest increase in sales in four months. Meanwhile, core retail sales rose by 0.7 percent on a seasonally adjusted basis in June from the prior month. Forecast for core retail sales in July: 0.4 percent increase