Weekly Forex Forecast: 14 – 18 September 2015

Sep 14, 5:22 am

The Aussie closed the week with strong gains of over 2.6% closed followed by the Euro and the British Pound each of which closed with 1.73% and 1.72% respectively. The US Dollar was trading soft for most of last week with lack of any major market impacting data. On Friday, the US Producer price index managed to rise above estimates giving a boost to inflation expectations. However, the University of Michigan consumer sentiment declined sharply leading to the US Dollar to close on a soft note.

Weekly Spot FX Performance – 11/09/2015 (Source: Finviz.com)
Weekly Spot FX Performance – 11/09/2015 (Source: Finviz.com)

The Japanese Yen was the weakest performing currency last week as the modest risk-on sentiment saw investors selling the safe haven currency for the more risky assets. The US Dollar was also obviously weaker for the week. The Kiwi dollar which saw a sharp decline managed to close the week with moderate gains of 0.58%.

Fundamentals for the Week 14/09 – 18/09

Date Time Currency Detail Forecast Previous
14-Sep 07:30 JPY Revised Industrial Production m/m -0.60% -0.60%
JPY Tertiary Industry Activity m/m 0.20% 0.30%
10:15 CHF PPI m/m -0.40% -0.30%
CHF Retail Sales y/y 1.50% -0.90%
12:00 EUR Industrial Production m/m 0.30% -0.40%
15-Sep 04:30 AUD Monetary Policy Meeting Minutes
AUD New Motor Vehicle Sales m/m -1.30%
Tentative JPY Monetary Policy Statement
Tentative JPY BOJ Press Conference
09:45 EUR French CPI m/m 0.40% -0.40%
11:30 GBP CPI y/y 0.00% 0.10%
GBP PPI Input m/m -2.20% -0.90%
GBP RPI y/y 0.90% 1.00%
GBP Core CPI y/y 1.00% 1.20%
GBP HPI y/y 6.20% 5.70%
GBP PPI Output m/m -0.20% -0.10%
12:00 EUR German ZEW Economic Sentiment 18.3 25
EUR ZEW Economic Sentiment 42.1 47.6
EUR Employment Change q/q 0.10% 0.10%
EUR Trade Balance 21.4B 21.9B
15:30 USD Core Retail Sales m/m 0.10% 0.40%
USD Retail Sales m/m 0.40% 0.60%
USD Empire State Manufacturing Index 0.7 -14.9
16:15 USD Capacity Utilization Rate 77.90% 78.00%
USD Industrial Production m/m -0.10% 0.60%
16:30 GBP CB Leading Index m/m -0.20%
17:00 USD Business Inventories m/m -0.20% 0.80%
Tentative NZD GDT Price Index 10.90%
16-Sep 01:45 NZD Current Account -1.51B 0.66B
02:30 AUD RBA Assist Gov Debelle Speaks
03:30 AUD MI Leading Index m/m 0.00%
08:00 JPY BOJ Monthly Report
11:30 GBP Average Earnings Index 3m/y 2.50% 2.40%
GBP Claimant Count Change -5.1K -4.9K
GBP Unemployment Rate 5.60% 5.60%
12:00 CHF ZEW Economic Expectations 5.9
EUR Final CPI y/y 0.20% 0.20%
EUR Final Core CPI y/y 1.00% 1.00%
15:30 CAD Manufacturing Sales m/m 1.20%
CAD Foreign Securities Purchases 8.51B
USD CPI m/m -0.10% 0.10%
USD Core CPI m/m 0.10% 0.10%
17:00 USD NAHB Housing Market Index 61 61
17:30 USD Crude Oil Inventories 2.6M
17-Sep 01:45 NZD GDP q/q 0.60% 0.20%
02:50 JPY Trade Balance -0.35T -0.37T
04:30 AUD RBA Bulletin
08:45 CHF SECO Economic Forecasts
09:35 JPY BOJ Gov Kuroda Speaks
10:30 CHF Libor Rate -0.75% -0.75%
CHF SNB Monetary Policy Assessment
11:00 EUR ECB Economic Bulletin
EUR Italian Trade Balance 2.47B 2.81B
11:30 GBP Retail Sales m/m 0.20% 0.10%
15:30 USD Building Permits 1.15M 1.13M
USD Unemployment Claims 276K 275K
USD Current Account -111B -113B
USD Housing Starts 1.16M 1.21M
17:00 USD Philly Fed Manufacturing Index 6.1 8.3
17:30 USD Natural Gas Storage 68B
21:00 USD FOMC Economic Projections
USD FOMC Statement
USD Federal Funds Rate <0.50% <0.25%
21:30 USD FOMC Press Conference
18-Sep 02:05 GBP BOE Quarterly Bulletin
02:30 AUD RBA Gov Stevens Speaks
02:50 JPY Monetary Policy Meeting Minutes
11:00 EUR Current Account 21.3B 25.4B
15:30 CAD Core CPI m/m 0.00%
CAD CPI m/m 0.10%
17:00 USD CB Leading Index m/m 0.20% -0.20%

 

Currencies/Events to Watch this Week

RBA Monetary Policy meeting minutes: The week ahead is a quiet one for the Aussie dollar as far as economic data is concerned. Tuesday, 15th September will see the release of the RBA’s monetary policy meeting minutes. It is most likely expected to remain a non-event given that the Australian Central Bank did not make changes to the monetary policy and also struck a largely neutral tone in the markets.

Canada Manufacturing and CPI: The monthly manufacturing sales and inflation numbers are due from Canada this week. With the BoC staying put on interest rates at its meeting last week, the focus will be on the monthly consumer inflation data which has remained unchanged at 0.00% on the core and 0.1% on the headline. A drop in the monthly consumer inflation is likely to bring back the speculation of a BoC rate cut at its next meeting in October.

SNB Meeting: Besides the Producer Price index data and the retail sales, the Swiss National bank will be meeting on 17th September. No changes are expected to the SNB Libor rate and the focus will more likely remain with the SNB’s currency interventions, especially in light of the Fed’s possible rate hike decision due later in the evening which could see the Swiss Franc being bid up in the process

Eurozone Inflation: The week ahead is quiet for the Euro with only the Eurozone annualized CPI data due for release. Expectations are for the CPI to remain unchanged from the previous month at 0.2% on the headline and 0.1% on the core. However, considering how the GDP data surprised last week, a possible beat on the CPI estimates cannot be ruled out.

UK Inflation and Jobs: Tuesday will see the release of the annualized CPI data from the UK. Expectations are for consumer inflation prices to have declined modestly with the headline CPI expected to stay flat at 0.0% while the Core CPI is expected to have fallen to 1.0% from 1.2% previously. Also this week will be the monthly jobs report. No change is expected to the unemployment rate which stands at 5.6% but the average hourly earnings is expected to rise softly to 2.5% from 2.4% last month.

BoJ Press Conference: The Bank of Japan is due to meet on 15th September. In the past week some officials from Japan voiced opinion that the BoJ should expand its QQE program. Given that the BoJ meets just a few days ahead of the Fed’s interest rate decision, it would be a close call. A possible easing in the QQE could indirectly signal that the Fed could skip hiking rates at this month’s meeting. Expect the Yen to stay volatile.

New Zealand Quarterly GDP: After the RBNZ cut rates by 25bps last week citing a slowdown in the economy, the quarterly GDP data is due for release. Expectations are on the hawkish side with the possibility that the New Zealand GDP expanded strongly at a pace of 0.6%, from 0.2% previously. The Global dairy trade index data is also due which has managed to post positive number in past two auctions. However, dairy prices have declined by over -15% this year and a continued positive data is needed to bring the conviction that the dairy prices might have bottomed out.

US CPI, Retail Sales, Fed decision: It will be a busy week for the US Dollar, starting with the retail sales numbers due on Tuesday followed by the Consumer inflation prices for the month. Friday’s PPI showed some hope as producer prices managed to rise above estimates. A positive print on the CPI could possibly shift the scales for the Fed’s interest rate decision. All eyes however will be tuned to the Fed on Thursday which is due to decide on whether to hike rates or not along with releasing the staff economic projections.

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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