Weekly Forex Forecast: October 5 – 9

The US Dollar gave up its gains built over the week on Friday as disappointing nonfarm payrolls saw investors shedding the US Dollar. Risky assets gained with Canadian dollar posting the strongest gains of the week rising 1.34%. The gains in the Canadian dollar were also supported by Crude Oil prices which posted modest gains for the week despite trading largely flat. The Kiwi dollar close the week with gains of 0.93%, despite the lack of any clear fundamentals supporting the New Zealand dollar, but was mostly due to the weaker US Dollar.

The British Pound was flat for the week but looks poised to recover from its previous week’s sharp declines. The Euro failed to capitalize on the USD’s weakness gaining only 0.13% for the week.

Fundamentals for the Week 05/10 – 09/10

Date	Time	Currency	Detail	Forecast	Previous
05-Oct	01:30	AUD	AIG Services Index		55.6
	02:30	AUD	MI Inflation Gauge m/m		0.10%
	03:30	AUD	ANZ Job Advertisements m/m		1.00%
	04:30	JPY	Average Cash Earnings y/y	0.70%	0.90%
	10:15	EUR	Spanish Services PMI	59.7	59.6
	10:45	EUR	Italian Services PMI	54.8	54.6
	10:50	EUR	French Final Services PMI	51.2	51.2
	10:55	EUR	German Final Services PMI	54.4	54.3
	11:00	EUR	Final Services PMI	54	54
	11:30	EUR	Sentix Investor Confidence	12.2	13.6
		GBP	Services PMI	56.4	55.6
	12:00	EUR	Retail Sales m/m	-0.10%	0.40%
	Day 1	EUR	Eurogroup Meetings
	16:45	USD	Final Services PMI	55.7	55.6
	17:00	USD	ISM Non-Manufacturing PMI	58	59
		USD	Labor Market Conditions Index m/m		2.1
06-Oct	00:00	NZD	NZIER Business Confidence		5
	03:30	AUD	Trade Balance	-2.36B	-2.46B
	06:30	AUD	Cash Rate	2.00%	2.00%
		AUD	RBA Rate Statement
	09:00	EUR	German Factory Orders m/m	0.50%	-1.40%
	6th-9th	GBP	Halifax HPI m/m		2.70%
	10:15	CHF	CPI m/m	0.10%	-0.20%
	11:10	EUR	Retail PMI		51.4
	11:30	GBP	Housing Equity Withdrawal q/q	-12.5B	-13.0B
	All Day	EUR	ECOFIN Meetings
	Day 2	EUR	Eurogroup Meetings
	15:30	CAD	Trade Balance	-0.3B	-0.6B
		USD	Trade Balance	-42.2B	-41.9B
	Tentative	NZD	GDT Price Index		16.50%
	17:00	CAD	Ivey PMI		58
		USD	IBD/TIPP Economic Optimism	44.6	42
	20:00	EUR	ECB President Draghi Speaks
07-Oct	00:30	USD	FOMC Member Williams Speaks
	01:30	AUD	AIG Construction Index		53.8
	02:01	GBP	BRC Shop Price Index y/y		-1.40%
	03:00	AUD	HIA New Home Sales m/m		-1.80%
	Tentative	JPY	Monetary Policy Statement
	08:00	JPY	Leading Indicators	103.40%	105.00%
	09:00	EUR	German Industrial Production m/m	0.30%	0.70%
	Tentative	JPY	BOJ Press Conference
	09:45	EUR	French Trade Balance	-3.6B	-3.3B
	10:00	CHF	Foreign Currency Reserves		540B
	11:30	GBP	Manufacturing Production m/m	0.50%	-0.80%
		GBP	Industrial Production m/m	0.30%	-0.40%
	Tentative	EUR	German 10-y Bond Auction		0.69|1.2
	15:30	CAD	Building Permits m/m		-0.60%
	17:00	GBP	NIESR GDP Estimate		0.50%
	17:30	USD	Crude Oil Inventories		4.0M
	20:01	USD	10-y Bond Auction		2.24|2.7
	22:00	USD	Consumer Credit m/m	18.6B	19.1B
08-Oct	02:01	GBP	RICS House Price Balance	56%	53%
	02:50	JPY	Core Machinery Orders m/m	3.10%	-3.60%
		JPY	Current Account	1.28T	1.32T
	06:45	JPY	30-y Bond Auction		1.41|3.1
	08:00	JPY	BOJ Monthly Report
		JPY	Economy Watchers Sentiment	48.6	49.3
	08:45	CHF	Unemployment Rate	3.40%	3.30%
	09:00	EUR	German Trade Balance	20.2B	22.8B
	14:00	GBP	MPC Official Bank Rate Votes	1-0-8	1-0-8
		GBP	Monetary Policy Summary
		GBP	Official Bank Rate	0.50%	0.50%
		GBP	Asset Purchase Facility	375B	375B
		GBP	MPC Asset Purchase Facility Votes	0-0-9	0-0-9
	14:30	EUR	ECB Monetary Policy Meeting Accounts
	15:15	CAD	Housing Starts		217K
	15:30	CAD	NHPI m/m	0.20%	0.10%
		USD	Unemployment Claims	274K	277K
	21:00	USD	FOMC Meeting Minutes
	22:30	USD	FOMC Member Williams Speaks
09-Oct	03:30	AUD	Home Loans m/m	5.10%	0.30%
	09:45	EUR	French Gov Budget Balance		-79.8B
		EUR	French Industrial Production m/m	0.60%	-0.80%
	11:00	EUR	Italian Industrial Production m/m	-0.30%	1.10%
	11:30	GBP	Trade Balance	-10.0B	-11.1B
		GBP	Construction Output m/m	1.10%	-1.00%
	15:30	CAD	Employment Change		12.0K
		CAD	Unemployment Rate		7.00%
		USD	Import Prices m/m	-0.50%	-1.80%
	16:10	USD	FOMC Member Lockhart Speaks
	17:00	USD	Wholesale Inventories m/m	0.10%	-0.10%
	17:30	CAD	BOC Business Outlook Survey
	20:30	USD	FOMC Member Evans Speaks

Time: GMT+3

Currencies/Events to Watch this Week

RBA interest rates: The RBA will convene this Tuesday, October 6th with expectations high that the central bank will leave interest rates unchanged at 2.0%. The data over the month has been broadly mixed but hasn’t declined drastically that would warrant a rate cut. The Aussie has managed to strengthen reasonably well in the past week which could be addressed in the RBA’s monetary statement as commodity prices remain pressured to the downside. A dovish narrative in the Australian Central bank statement could see some potential downside moves in the Aussie. However, the downside risks remain more of a short term dip.

BoJ Monetary policy: The consensus is finely divided as to whether the Bank of Japan will expand its QQE purchases or not. While the risks remain, an expansion to QQE will be somewhat contradictory to BoJ’s Kuroda who has so far maintained an optimistic view that Japan’s inflation would reach the 2% target range. The Japanese Yen has firmer in the past few weeks albeit trading flat for the most part. Should the BoJ stay put on policy, the Yen is likely to appreciate further in the near term.

ECB’s Draghi Speaks: There is not much going on for the Euro in terms of fundamentals this week. For the most part, the week ahead is busy with the services PMI data from various Eurozone economies and retail sales numbers. ECB Chief, Mario Draghi is due to speak on Tuesday, October 6th. While he has maintained a cautious approach at his speech earlier last week regarding the ECB expanding its QE plans, it will be interesting to see how Draghi will word his statement.

BoE Monetary Policy: The British Pound has weakened considerably over the past few weeks and the week ahead will pose another important risk from the BoE. While no change is expected, focus still remains if there will be other dissenters for a rate hike, which currently stands at 1. Various BoE officials have sounded hawkish in their speeches since last month’s BoE monetary policy meeting, but it will be left to see how much of those comments translate to when it comes to voting for rate hikes.

Canada Jobs: On Friday, October 9th, the monthly jobs numbers from Canada is due. Expectations are for the Canadian unemployment rate ….. So far, the Canadian jobs report has largely managed to beat estimates and has posted positive prints. A beat on estimates yet again could keep the USDCAD pressured to the downside. Besides the unemployment data, BoC Governor Poloz’s speech is due along with the building permits and Ivey PMI number.

FOMC Meeting Minutes: On Thursday, October 8th the Federal Reserve will reveal the meeting minutes from its monetary policy in September. It was a close call with the Fed opting to keep rates changed almost unanimously. The markets will be focused on the minutes to view what the Fed thinks on its prospects of a rate hike. Last month’s FOMC meeting was very hawkish with the Fed reiterating rate hikes this year including October. However with the September jobs report faring badly, the FOMC minutes could gain significance into what the future course of the Federal Reserve would be. FOMC meeting minutes aside, other data this week from the US is relatively light with the exception of the ISM non-manufacturing PMI.