Weekly Forex Forecast: October 19 – 23

The currency markets were mixed last week as the Kiwi emerged at the top gaining 1.67% for the week while the Australian dollar made up the tail end, losing -0.93% for the week. The US Dollar remained muted as most of the currencies attempted to gain on soft US economic data. The Kiwi’s rally has been impressive to say the least which has gained largely due to weak fundamentals from the US. There were no major economic releases last week to support the Kiwi’s rally which points to a technical rally rather than fundamental. This potentially opens up the risk of a possible decline in the NZDUSD in the near term.

The Australian dollar’s decline last week came as the unemployment data remained largely positive but nothing surprising. There has been a lot of speculation that the RBA could deliver an interest rate cut in November which led to the currency declining by middle of the week. The British Pound continued to maintain its recovery gaining 0.83% against the Greenback. Positive jobs report has kept the Pound well supported but inflation remains a point of concern in the longer run.

Fundamentals for the Week 19/10 – 23/10

Date	Time	Currency	Detail	Forecast	Previous
19-Oct	02:01	GBP	Rightmove HPI m/m		0.90%
	05:00	CNY	GDP q/y	6.80%	7.00%
		CNY	Industrial Production y/y	6.00%	6.10%
		CNY	Fixed Asset Investment ytd/y	10.80%	10.90%
		CNY	Retail Sales y/y	10.80%	10.80%
	17:00	USD	FOMC Member Brainard Speaks
		USD	NAHB Housing Market Index	62	62
	All Day	CAD	Federal Election
	19:00	USD	FOMC Member Lacker Speaks
20-Oct	03:30	AUD	Monetary Policy Meeting Minutes
	09:00	CHF	Trade Balance	2.51B	2.86B
		EUR	German PPI m/m	-0.10%	-0.50%
	11:00	EUR	Current Account	20.1B	22.6B
	13:00	GBP	BOE Gov Carney Speaks
	15:30	CAD	Wholesale Sales m/m		0.00%
		USD	Building Permits	1.16M	1.17M
		USD	Housing Starts	1.14M	1.13M
	16:00	USD	FOMC Member Dudley Speaks
	16:15	USD	FOMC Member Powell Speaks
	Tentative	NZD	GDT Price Index		9.90%
	18:00	USD	Fed Chair Yellen Speaks
21-Oct	00:45	NZD	Visitor Arrivals m/m		0.20%
	02:00	AUD	CB Leading Index m/m		0.30%
	02:30	AUD	MI Leading Index m/m		-0.30%
	02:50	JPY	Trade Balance	-0.07T	-0.36T
	05:00	NZD	Credit Card Spending y/y		10.50%
	07:30	JPY	All Industries Activity m/m	-0.10%	0.20%
	11:30	GBP	Public Sector Net Borrowing	9.1B	11.3B
	17:00	CAD	BOC Monetary Policy Report
		CAD	BOC Rate Statement
		CAD	Overnight Rate	0.50%	0.50%
	17:30	USD	Crude Oil Inventories		7.6M
	18:15	CAD	BOC Press Conference
22-Oct	10:00	EUR	Spanish Unemployment Rate	21.90%	22.40%
	11:30	GBP	Retail Sales m/m	0.30%	0.20%
	14:45	EUR	Minimum Bid Rate	0.05%	0.05%
	15:30	CAD	Core Retail Sales m/m		0.00%
		CAD	Retail Sales m/m		0.50%
		EUR	ECB Press Conference
		USD	Unemployment Claims	266K	255K
	16:00	USD	HPI m/m	0.40%	0.60%
	17:00	EUR	Consumer Confidence	-7	-7
		USD	Existing Home Sales	5.38M	5.31M
		USD	CB Leading Index m/m	0.00%	0.10%
23-Oct	04:35	JPY	Flash Manufacturing PMI	50.6	51
	10:00	EUR	French Flash Manufacturing PMI	50.2	50.6
		EUR	French Flash Services PMI	51.9	51.9
	10:30	EUR	German Flash Manufacturing PMI	51.8	52.3
		EUR	German Flash Services PMI	54	54.1
	11:00	EUR	Flash Manufacturing PMI	51.8	52
		EUR	Flash Services PMI	53.6	53.7
	12:00	EUR	Italian Retail Sales m/m	0.30%	0.40%
	15:30	CAD	Core CPI m/m		0.20%
		CAD	CPI m/m		0.00%
	16:45	USD	Flash Manufacturing PMI	53	53.1

Time: GMT+3

Currencies/Events to Watch this Week

RBA Monetary Policy minutes: The RBA’s monetary policy meeting minutes are due for release on 20th October. With the central bank holding rates steady at its last meeting and with rising speculation of the RBA to deliver another rate cut, the meeting minutes will gain prominence. Concerns on the housing markets, if mentioned in the meeting minutes could see the Aussie take a hit as it could potentially point to another possible rate cut in the near term.

BoC Monetary Policy: The Bank of Canada is due to meet this week on 21st October. Expectations remain firm for the BoC to hold rates steady. While the Canadian economy hasn’t gained much traction since the last meeting, the BoC could rather strike a dovish tone than deliver another rate cut. Also this week, the Canada retail sales numbers are due including the monthly inflation figures. The Canadian dollar has gained for the past two weeks and the upcoming economic data this week will keep the volatility strong in the CAD crosses.

China GDP: The week starts off with China’s quarterly GDP numbers which is forecasted to have risen 6.8%, down from 7.0% previously. A miss on the estimates could see the markets staying averse to risk sentiment. Also the industrial production data is due out with estimates pointing to a soft growth of 6.0% from 6.1% previously.

ECB Monetary Policy: Focus shifts to the European Central bank this week as the markets turn their attention to further talks of QE expansion. Inflation numbers released last week remained subdued and one which has been widely talked about. There are speculations that the markets are gearing up for another rate cut to the already negative deposit rates. The rise in the Euro against the Greenback is also weighing on the markets this week in the run up to the ECB’s monetary policy and the press conference.

UK Retail sales: Retail sales numbers are due from the UK this week with estimates of 0.3% increase, up from 0.2% previously. Retail sales numbers have been relatively weak for the past 4 months and the data is likely to see the third quarter GDP remain subdued as a result. With inflation staying low, expectations are high for retail sales to start showing consumer spending in the economy. This week, BoE Governor Mark Carney is also due to speak before the Treasury Select Committee.

Slow week for the US Dollar: There is not much of economic data due from the US this week with the exception of the housing data in terms of building permits and housing starts. Various FOMC members are due to speak including Fed Chair Janet Yellen who is expected to give brief remarks at an event. It is unlikely that there will be a lot of monetary policy talk in her speech. For the most part, housing data will be of importance this week and could gain significance amid a string of weak economic data last week.