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FX Week Ahead: Janet Yellen Speech, US GDP Revision

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The Australian dollar was the weakest currency last week as the AUD gave up the gains logged earlier in the week after posting a weekly high to 0.7749. Following the AUD was the US dollar which continued to post steady declines for two straight weeks. With diminishing prospects of a rate hike for September the markets continues to bet against the dollar.

Weekly Spot FX Performance – 19/08/2016
Weekly Spot FX Performance – 19/08/2016

On the other end of the scale, the Swiss franc closed the strong gaining 1.51% against the US dollar. This was followed by the euro which closed the week 1.40% higher. Economic data from the euro zone was fairly quiet last week with most of the gains in the euro coming off a weaker greenback. The British pound came in third gaining 1.21% on the week but not before giving up some of its gains on Friday.

Economic Calendar for the Week 22/08 – 26/08

Date Time Currency Detail Forecast Previous
22-Aug 13:30 CAD Wholesale Sales m/m 0.50% 1.80%
23-Aug 03:00 JPY Flash Manufacturing PMI 49.5 49.3
05:00 JPY BOJ Gov Kuroda Speaks
07:00 CHF Trade Balance 3.79B 3.55B
08:00 EUR French Flash Manufacturing PMI 49.1 48.6
EUR French Flash Services PMI 50.6 50.5
08:30 EUR German Flash Manufacturing PMI 53.7 53.8
EUR German Flash Services PMI 54.3 54.4
09:00 EUR Flash Manufacturing PMI 52.1 52
EUR Flash Services PMI 53 52.9
14:45 USD Flash Manufacturing PMI 53.1 52.9
15:00 EUR Consumer Confidence -8 -8
USD New Home Sales 575K 592K
USD Richmond Manufacturing Index 6 10
23:45 NZD Trade Balance -320M 127M
24-Aug 02:30 AUD Construction Work Done q/q -1.90% -2.60%
07:00 EUR German Final GDP q/q 0.30% 0.40%
09:30 GBP BBA Mortgage Approvals 38.5K 40.1K
USD HPI m/m 0.30% 0.20%
15:00 USD Existing Home Sales 5.55M 5.57M
25-Aug 09:00 EUR German Ifo Business Climate 108.5 108.3
13:30 CAD Corporate Profits q/q -4.60%
USD Core Durable Goods Orders m/m 0.40% -0.40%
USD Unemployment Claims 265K 262K
USD Durable Goods Orders m/m 3.50% -3.90%
14:45 USD Flash Services PMI 52.2 51.4
All Day ALL Jackson Hole Symposium
26-Aug 00:30 JPY Tokyo Core CPI y/y -0.40% -0.40%
JPY National Core CPI y/y -0.40% -0.50%
06:00 JPY BOJ Core CPI y/y 0.80%
07:00 EUR GfK German Consumer Climate 10.2 10
09:00 EUR M3 Money Supply y/y 5.00% 5.00%
EUR Private Loans y/y 1.80% 1.70%
09:30 GBP Second Estimate GDP q/q 0.60% 0.60%
GBP Prelim Business Investment q/q -0.90% -0.60%
GBP Index of Services 3m/3m 0.40% 0.30%
13:30 USD Prelim GDP q/q 1.10% 1.20%
USD Goods Trade Balance -62.3B -63.3B
USD Prelim GDP Price Index q/q 2.20% 2.20%
Tentative USD Fed Chair Yellen Speaks
15:00 USD Revised UoM Consumer Sentiment 90.6 90.4
USD Revised UoM Inflation Expectations 2.50%
All Day ALL Jackson Hole Symposium

Time: GMT+1

Currencies/Events to Watch this Week

AUD: The week ahead is quiet for the Australian economy with Monday seeing the release of the leading index from conference board. On Wednesday, the quarterly report for the construction work done is expected to show a 1.90% decline following a 2.60% decline seen the month before.

JPY: Bank of Japan Governor Kuroda’s speech will be the main event next week. Kuroda is scheduled to speak on Tuesday. Yen strength, the upcoming September monetary policy assessments will be some of the points that are likely to be covered. Later in the week the monthly inflation figures are up for release. The National Core CPI is expected to continue its negative trend with forecasts showing a 0.40% decline albeit slightly better than June’s 0.50% decline. The Tokyo core CPI is also expected to fall 0.40% on the month.

EUR: From the euro area data next week will see the release of flash manufacturing PMI numbers, which will shed light on the Q3 growth. The PMI indices surprised to the positive in July despite the Brexit vote. Expectations for the flash PMI’s for August is expected to see the indices maintain the same pace of growth in the sectors. German Ifo business sentiment data is also up during the week.

GBP: In the UK, the markets are relatively quiet with no major releases in store. Save for the revised Q2 GDP data which is due on Friday. Expectations call for an unchanged print at 0.60% as previously reported in the first estimates. Other second tier data includes the CBI retail survey which is expected to show an improvement in the index falling to a four and half year low in July.

USD: The main event risk from the US the week ahead will be the speech from Fed Chair, Janet Yellen on Friday at the Jackson Hole symposium. Ms. Yellen is expected to prepare the markets for a rate hike later this year, although it remains an open question on whether the Fed will move in September or December. Yellen’s speech will be closely watched also for any references to San Francisco Fed President Williams who had earlier last week suggested that the Fed should consider scrapping the low inflation target for a higher inflation goal. Friday will also see the release of the US GDP report and the durable goods orders due on Thursday.

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