Fundamental Analysis by Admiral Markets
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Admiral Markets
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FOMC And Scottish Voting Likely To Fuel The Forex Market
With the continued progression of improved US economic numbers supporting the early rate hike by Fed, the US Dollar kept strengthening against majority of its counterparts during last week. However, BoE Governor, Mark Carney’s signal for a rate change during the Spring 2015 provided across the board strength to the British Pound (GBP). Moreover, the BoJ Governor, Haruhiko Kuroda’s readiness to introduce additional stimulus on the drop of 2.0% inflation caused considerable weakness to the Japanese Yen (JPY).
Monetary policy meeting by Federal Reserve, on Wednesday, coupled with the voting on Scottish departure from UK, on Thursday, are likely to take the centre stage in fueling the volatility into the forex market during the current week. Moreover, the ZEW indices from Euro-zone and the voting on Asset Purchase Facility and Official Bank Rate by the Bank of England (BoE) MPC members are likely to provide additional support to the forex market volatility.
Even after witnessing the downtick in recent employment numbers, market players, and some of the FOMC members as well, continued expecting the earlier rate hike by US Federal Reserve as the Retail Sales together with the consumer sentiment index, published during late last week, kept showing improvements into the world’s largest economy. Moreover, the recent announcement by the BoE Governor that they can alter their benchmark interest rate by Spring 2015 also fuelled speculations that the Fed will also follow the same path and will discuss the exact timeline for altering the benchmark interest rate in addition to announcing a regular tapering of $10 billion to its monthly asset purchase program in the monetary policy meeting on Wednesday. The importance of the FOMC meeting is further increased by the latest economic projections and the press conference which follows the FOMC announcement.
Should the FOMC provide hints to the earlier rate hike, either directly or indirectly through the press conference, the US Dollar becomes vulnerable to witness heavy upside momentum. Moreover, the market is also awaiting revisions to growth numbers and interest rate forecasts from the MPC members. Should the economic projections signal that more of the FOMC members are being hawkish, the US Dollar will have the reason to extend its advance. However, the recent dip into the employment numbers can help the Fed Chair to avoid speaking about the interest rate hike and continue playing the cautious tune, which in-turn can stall the recent rally of US Dollar.
In addition to the FOMC, the CPI numbers, scheduled to release on Wednesday, coupled with the Building Permits, Philly Fed Manufacturing Index and Unemployment Claims, scheduled for Thursday release, becomes important to determine the intermittent US Dollar moves. The CPI figure bears the forecast of continued being at lowest level since March 2014 near 0.1%; however, the core CPI numbers is likely to test the three month high by being near to 0.2%, which can become a reason for the policy makers to think of early rate hike should it meets or surpasses the expectations. The Building Permits and the Jobless Claims are likely to remain near to the previous readings and aren’t expected to cause much of the volatility unless registering any drastic changes. Moreover, the Philly Fed Manufacturing Index, is expected to decline towards the lowest level in three months; however, the Empire State Manufacturing and Industrial Production, additional manufacturing releases from US, remained a bit positive and likely to support chances that the Philly Index will also witness the upside tick and can continue supporting the US Dollar advance.
The Euro region calendar remains a bit silent during the week, except the ZEW Economic Sentiment readings for Germany and the Euro-zone on Tuesday and the final reading of CPI y/y on Wednesday. These numbers aren’t expected to restore the damages in Euro that are done via latest ECB meeting unless the actual readings show considerable improvements into the troubled economy.
Having witnessed the recent signal by the BoE Governor, the market players are likely to put more emphasis on the MPC voting on Asset Purchase and Official Bank Rates, scheduled for Wednesday, in order to witness additional support for the change into the current MPC and interest rate. Should the MPC members kept supporting the change into the current stance of BoE, the GBP can become vulnerable to extend its recent advance. Moreover, the CPI figure and the Retail Sales, scheduled to release on Tuesday and Thursday respectively, are additional data points that are likely to fuel volatility into the pairs connected to the GBP. Should the CPI figure advances near the BoE target of 2.0% and the Retail Sales, the highest contributor to the UK GDP, tests the expected up-move to 0.4% rise, the GBP traders can have a reason to celebrate.
After the BoJ Governor, Haruhiko Kuroda’s, ability to signal the immediate change into the monetary policy should the inflation outlook deteriorate further, market players are likely to concentrate more on the two speeches by the central bank governor, on Tuesday and Thursday, in order to get further details of additional monetary easing measures. Should the Governor discusses the issue in detail by indicating the weakening inflation into the economy, the JPY can extend its decline.
Hence, in addition to the important data-points, the qualitative readings from UK and Japan are likely to determine the near-term movements of the respective currencies as market players are looking for hints relating to monetary policy changes.
Other than the economic numbers, the Scottish Independence Vote, scheduled for Thursday, becomes the major market mover for the upcoming week. The issue of Scotland departure from UK has been gaining momentum since June 2013 and has been at the center stage of fueling market volatility as the economy, if cuts itself from the UK, can become a severe heart attack to the UK GDP. Moreover, there are many uncertainties relating to the economic formulation should the country departs itself from UK which in-turn likely to fuel the demand of safe haven currencies. Recent surveys supports the Yes vote to be famous and is signaling a setback to the GBP should the economy departs while there are likely chances that the survey can become a place to misguide due to the less numbers of people included. Hence, it becomes important for the market players to wait for the actual results before concluding anything about the Scottish future.
“Original analysis is provided by Admiral Markets”
With the continued progression of improved US economic numbers supporting the early rate hike by Fed, the US Dollar kept strengthening against majority of its counterparts during last week. However, BoE Governor, Mark Carney’s signal for a rate change during the Spring 2015 provided across the board strength to the British Pound (GBP). Moreover, the BoJ Governor, Haruhiko Kuroda’s readiness to introduce additional stimulus on the drop of 2.0% inflation caused considerable weakness to the Japanese Yen (JPY).
Monetary policy meeting by Federal Reserve, on Wednesday, coupled with the voting on Scottish departure from UK, on Thursday, are likely to take the centre stage in fueling the volatility into the forex market during the current week. Moreover, the ZEW indices from Euro-zone and the voting on Asset Purchase Facility and Official Bank Rate by the Bank of England (BoE) MPC members are likely to provide additional support to the forex market volatility.
Even after witnessing the downtick in recent employment numbers, market players, and some of the FOMC members as well, continued expecting the earlier rate hike by US Federal Reserve as the Retail Sales together with the consumer sentiment index, published during late last week, kept showing improvements into the world’s largest economy. Moreover, the recent announcement by the BoE Governor that they can alter their benchmark interest rate by Spring 2015 also fuelled speculations that the Fed will also follow the same path and will discuss the exact timeline for altering the benchmark interest rate in addition to announcing a regular tapering of $10 billion to its monthly asset purchase program in the monetary policy meeting on Wednesday. The importance of the FOMC meeting is further increased by the latest economic projections and the press conference which follows the FOMC announcement.
Should the FOMC provide hints to the earlier rate hike, either directly or indirectly through the press conference, the US Dollar becomes vulnerable to witness heavy upside momentum. Moreover, the market is also awaiting revisions to growth numbers and interest rate forecasts from the MPC members. Should the economic projections signal that more of the FOMC members are being hawkish, the US Dollar will have the reason to extend its advance. However, the recent dip into the employment numbers can help the Fed Chair to avoid speaking about the interest rate hike and continue playing the cautious tune, which in-turn can stall the recent rally of US Dollar.
In addition to the FOMC, the CPI numbers, scheduled to release on Wednesday, coupled with the Building Permits, Philly Fed Manufacturing Index and Unemployment Claims, scheduled for Thursday release, becomes important to determine the intermittent US Dollar moves. The CPI figure bears the forecast of continued being at lowest level since March 2014 near 0.1%; however, the core CPI numbers is likely to test the three month high by being near to 0.2%, which can become a reason for the policy makers to think of early rate hike should it meets or surpasses the expectations. The Building Permits and the Jobless Claims are likely to remain near to the previous readings and aren’t expected to cause much of the volatility unless registering any drastic changes. Moreover, the Philly Fed Manufacturing Index, is expected to decline towards the lowest level in three months; however, the Empire State Manufacturing and Industrial Production, additional manufacturing releases from US, remained a bit positive and likely to support chances that the Philly Index will also witness the upside tick and can continue supporting the US Dollar advance.
The Euro region calendar remains a bit silent during the week, except the ZEW Economic Sentiment readings for Germany and the Euro-zone on Tuesday and the final reading of CPI y/y on Wednesday. These numbers aren’t expected to restore the damages in Euro that are done via latest ECB meeting unless the actual readings show considerable improvements into the troubled economy.
Having witnessed the recent signal by the BoE Governor, the market players are likely to put more emphasis on the MPC voting on Asset Purchase and Official Bank Rates, scheduled for Wednesday, in order to witness additional support for the change into the current MPC and interest rate. Should the MPC members kept supporting the change into the current stance of BoE, the GBP can become vulnerable to extend its recent advance. Moreover, the CPI figure and the Retail Sales, scheduled to release on Tuesday and Thursday respectively, are additional data points that are likely to fuel volatility into the pairs connected to the GBP. Should the CPI figure advances near the BoE target of 2.0% and the Retail Sales, the highest contributor to the UK GDP, tests the expected up-move to 0.4% rise, the GBP traders can have a reason to celebrate.
After the BoJ Governor, Haruhiko Kuroda’s, ability to signal the immediate change into the monetary policy should the inflation outlook deteriorate further, market players are likely to concentrate more on the two speeches by the central bank governor, on Tuesday and Thursday, in order to get further details of additional monetary easing measures. Should the Governor discusses the issue in detail by indicating the weakening inflation into the economy, the JPY can extend its decline.
Hence, in addition to the important data-points, the qualitative readings from UK and Japan are likely to determine the near-term movements of the respective currencies as market players are looking for hints relating to monetary policy changes.
Other than the economic numbers, the Scottish Independence Vote, scheduled for Thursday, becomes the major market mover for the upcoming week. The issue of Scotland departure from UK has been gaining momentum since June 2013 and has been at the center stage of fueling market volatility as the economy, if cuts itself from the UK, can become a severe heart attack to the UK GDP. Moreover, there are many uncertainties relating to the economic formulation should the country departs itself from UK which in-turn likely to fuel the demand of safe haven currencies. Recent surveys supports the Yes vote to be famous and is signaling a setback to the GBP should the economy departs while there are likely chances that the survey can become a place to misguide due to the less numbers of people included. Hence, it becomes important for the market players to wait for the actual results before concluding anything about the Scottish future.
“Original analysis is provided by Admiral Markets”
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Admiral Markets
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Possibly A Range-Bound Week Ahead
Last week, the overall US Dollar index (I.USDX), which measures the US Dollar performance against other major currencies, posted yet another week of gains on the back of FOMC meeting. The FOMC economic projection showed majority of the members projecting higher interest rates for the upcoming year, eventually boosting demand for the US Dollar. Elsewhere, the British Pound failed to capitalize on the gains witnessed before the Scottish referendum on independence, which rejected independence from the UK.
Although, the US economic calendar this week is relatively quiet, but PMI figures from important economies globally might provide some momentum to the market. Major economic releases from the US include, existing and new home sales data along with the release of durable goods orders and final GDP print for the second quarter of 2014. Here is a brief outlook on some major market moving events scheduled for the upcoming week.
Fresh readings on existing home sales and new home sales are scheduled for release on Monday and Wednesday respectively. This week's housing data will further assist investors to gauge the health of the US housing sector, which has been quite erratic in the recent past. Existing home sales for August are expected to continue the positive momentum and rise further to an annualized rate of 5.21 million units. Meanwhile, following a lower-than-expected gains for two consecutive months, new home sales for August are expected to rise to a seasonally adjusted annual rate of 432,000 units.
Data related to durable goods orders is closely scrutinized to support the optimistic views of a faster US economic growth. Durable are estimated to drop 17.7% mainly because of a drop in orders for Boeing aircraft. On the other hand, core durable goods orders, which exclude transportation items, are predicted to show a healthy gain of 0.7%.
Investors will also watch for the final print of US GDP data for the second quarter of 2014, scheduled for release on Friday, and is expected to show an annualized growth of 4.6%, higher than second estimate of 4.2% annual growth rate. Other data to watch include revised UoM consumer sentiment for September and is scheduled for release on Friday.
Market participants would specially be focusing on some important PMI readings from China and Euro-zone, which are scheduled for release on Tuesday. The Chinese HSBC Flash Manufacturing PMI data for the month of September is scheduled for release on Tuesday. Although market consensus are projecting a lower reading of 50.00 this time as compared 50.2 recorded in the previous month. The index is still remain in expansion territory at 50.00 for fourth consecutive month.
From the Euro-zone, investors will be particularly interested in the release of flash version of manufacturing and service PMI readings from Euro-zone's two largest economies, Germany and France, along with the broader Euro-zone PMI reading for the month of September, which are scheduled for release on Tuesday. The German and broader Euro-zone PMI numbers are expected to remain in expansion territory, but the expansion rate is expected to show modest expansion as compared to the previous month. Meanwhile, the French manufacturing PMI might still continue showing contraction for fifth consecutive month and the services PMI is expected remain marginally above 50.00 mark, which separates expansion and contraction.
With very little in term of any major economic events scheduled for the upcoming week, the Forex market could possibly witness narrow, range-bound trade. However, a high degree of deviation from the expected data points could add fuel to the recent rise in volatility witnessed in the Forex market.
“Original analysis is provided by Admiral Markets”
Last week, the overall US Dollar index (I.USDX), which measures the US Dollar performance against other major currencies, posted yet another week of gains on the back of FOMC meeting. The FOMC economic projection showed majority of the members projecting higher interest rates for the upcoming year, eventually boosting demand for the US Dollar. Elsewhere, the British Pound failed to capitalize on the gains witnessed before the Scottish referendum on independence, which rejected independence from the UK.
Although, the US economic calendar this week is relatively quiet, but PMI figures from important economies globally might provide some momentum to the market. Major economic releases from the US include, existing and new home sales data along with the release of durable goods orders and final GDP print for the second quarter of 2014. Here is a brief outlook on some major market moving events scheduled for the upcoming week.
Fresh readings on existing home sales and new home sales are scheduled for release on Monday and Wednesday respectively. This week's housing data will further assist investors to gauge the health of the US housing sector, which has been quite erratic in the recent past. Existing home sales for August are expected to continue the positive momentum and rise further to an annualized rate of 5.21 million units. Meanwhile, following a lower-than-expected gains for two consecutive months, new home sales for August are expected to rise to a seasonally adjusted annual rate of 432,000 units.
Data related to durable goods orders is closely scrutinized to support the optimistic views of a faster US economic growth. Durable are estimated to drop 17.7% mainly because of a drop in orders for Boeing aircraft. On the other hand, core durable goods orders, which exclude transportation items, are predicted to show a healthy gain of 0.7%.
Investors will also watch for the final print of US GDP data for the second quarter of 2014, scheduled for release on Friday, and is expected to show an annualized growth of 4.6%, higher than second estimate of 4.2% annual growth rate. Other data to watch include revised UoM consumer sentiment for September and is scheduled for release on Friday.
Market participants would specially be focusing on some important PMI readings from China and Euro-zone, which are scheduled for release on Tuesday. The Chinese HSBC Flash Manufacturing PMI data for the month of September is scheduled for release on Tuesday. Although market consensus are projecting a lower reading of 50.00 this time as compared 50.2 recorded in the previous month. The index is still remain in expansion territory at 50.00 for fourth consecutive month.
From the Euro-zone, investors will be particularly interested in the release of flash version of manufacturing and service PMI readings from Euro-zone's two largest economies, Germany and France, along with the broader Euro-zone PMI reading for the month of September, which are scheduled for release on Tuesday. The German and broader Euro-zone PMI numbers are expected to remain in expansion territory, but the expansion rate is expected to show modest expansion as compared to the previous month. Meanwhile, the French manufacturing PMI might still continue showing contraction for fifth consecutive month and the services PMI is expected remain marginally above 50.00 mark, which separates expansion and contraction.
With very little in term of any major economic events scheduled for the upcoming week, the Forex market could possibly witness narrow, range-bound trade. However, a high degree of deviation from the expected data points could add fuel to the recent rise in volatility witnessed in the Forex market.
“Original analysis is provided by Admiral Markets”
Admiral Markets
AdmiralMarkets.com Representative
- Messages
- 95
A Week Full of Market Moving Economic Events
Last week's upward revision of US second-quarter GDP and a surge in new home sales benefited the US Dollar index (I.USDX), which measures US Dollar's performance against a basket of currencies, to register its 11th straight weekly gain and hit a fresh four-year high. Other US economic data released in the week gone-by showed durable goods orders in August plunging by 18.2% because of a drop in orders for Boeing aircraft, while existing home sales also witnessed some pull-back in August.
Heading into fresh trading week, investors gear up for a slew top-tier economic releases, including the closely watched US employment reports and ECB's monetary policy decision, lined-up at the beginning of a new month. Here is a brief outlook on some of the important market-moving events scheduled during the week ahead.
Important US Economic Releases
US employment reports have always been known for generating substantial volatility in the financial markets and this week's NFP data on Friday would be no exception. As the US Fed moves closer to ending its bond purchase program, labor market reports for the month of September would play a major role in fueling speculations of a rate hike by the US central bank. Following a disappointing print of 142,000 jobs in August, economists are expecting a bounce-back in September with the expected addition of 216,000 jobs while some economists even expect the August number to be revised higher. Meanwhile, the unemployment rate is expected to hold steady at 6.1%. A reading above 200,000 for September and a higher revision of August number would reflect continuing improvement in the US labor market conditions, which might lead to the central bank considering a rate-hike earlier-than-expected.
In the run-up to the NFP data, important economic data scheduled for release this week include the ADP report, which shows the number of private-sector jobs addition, is scheduled for release on Wednesday and is expected to show an addition of 206,000 new private-sector jobs in September. Also, the ISM manufacturing and non-manufacturing PMI data are scheduled for release on Wednesday and Friday respectively. Both the manufacturing activity and services sector continued expanding at a faster-than-expected pace in August and even for September the indices are expected to show continuing expansion but at a slightly slower pace. The ISM manufacturing index is expected to come-in at 58.6, down from 59.0 in August and non-manufacturing index is expected to reach 58.5, again down from August reading of 59.6. Investors will also have a look at the US trade balance data for the month of August, also scheduled for release on Friday, and expected to reach $41.0 Billion from the previous month's reading of $40.5 Billion.
Other data to watch-out from the US includes the release of a forward looking indicator of the housing sector, pending home sales, scheduled for release on Monday and the Conference Board's consumer confidence index, scheduled for release on Tuesday.
Although the US Dollar seems to have established a strong trend, but a series of economic data this week, including Friday's jobs report, could pose some risk to the broader US Dollar rally. A disappointing NFP reading, say below 200,000, could seriously deteriorate the ongoing up-trend for the US Dollar.
ECB Monetary Policy Decision
The ECB is scheduled to announce its monetary policy decision on Thursday, but ahead of that investors will closely scrutinize the Euro-zone inflation and employment data, both scheduled for release on Tuesday. The flash version of Euro-zone CPI for the month of September is expected to remain subdued at 0.3% and the unemployment rate is also expected to remain stable at 11.5% for the month of August. Meanwhile in view of a surprise cut in its benchmark rates on September-4 and announcement of fresh quantitative easing measures, in terms of purchasing non-financial private sector assets under Asset Backed Securities purchase program and purchasing covered bonds under a new covered bond purchase program, the ECB is not expected to announce any fresh moves this time. However, the ECB press conference, which will be followed by the monetary policy decision announcement and where market participants are expecting some additional details about the quantitative easing program, might trigger some volatile moves for the Euro-zone common currency, Euro. Should the ECB hint towards or announce some additional stimulus measures, it should continue suppressing Euro in the near-term.
Other Important Economic Releases
Economic data that could have a material impact on the Australian Dollar (AUD), includes PMI figures for September from Australia's largest trading partner, China, along with country's monthly retail sales and trade balance data for the month of August. Chinese PMI figures for the month of September includes HSBC's final and official manufacturing PMI, scheduled for release on Tuesday and Wednesday respectively. Meanwhile, Australian retail sales data is also scheduled for release on Tuesday, while trade balance data is scheduled for release on Thursday. Chinese economic data, specially pertaining to manufacturing activity, always has a lasting effect on AUD. Hence, any deterioration in Chinese manufacturing activity is likely to further exert pressure on the already weakening Australian Dollar.
Important data to watch from this week's UK economic calendar include key PMI readings for the month of September and trade balance data for the second quarter of 2014. The manufacturing PMI data is scheduled for release on Wednesday, Thursday's key event include construction PMI and release of services PMI is scheduled on Friday. Meanwhile, UK second quarter current account deficit, scheduled for release on Tuesday, is expected to shrink further to 16.9 Billion Pounds after a slightly higher-than-expected deficit of 18.5 Billion Pounds in the first-quarter.
“Original analysis is provided by Admiral Markets”
Last week's upward revision of US second-quarter GDP and a surge in new home sales benefited the US Dollar index (I.USDX), which measures US Dollar's performance against a basket of currencies, to register its 11th straight weekly gain and hit a fresh four-year high. Other US economic data released in the week gone-by showed durable goods orders in August plunging by 18.2% because of a drop in orders for Boeing aircraft, while existing home sales also witnessed some pull-back in August.
Heading into fresh trading week, investors gear up for a slew top-tier economic releases, including the closely watched US employment reports and ECB's monetary policy decision, lined-up at the beginning of a new month. Here is a brief outlook on some of the important market-moving events scheduled during the week ahead.
Important US Economic Releases
US employment reports have always been known for generating substantial volatility in the financial markets and this week's NFP data on Friday would be no exception. As the US Fed moves closer to ending its bond purchase program, labor market reports for the month of September would play a major role in fueling speculations of a rate hike by the US central bank. Following a disappointing print of 142,000 jobs in August, economists are expecting a bounce-back in September with the expected addition of 216,000 jobs while some economists even expect the August number to be revised higher. Meanwhile, the unemployment rate is expected to hold steady at 6.1%. A reading above 200,000 for September and a higher revision of August number would reflect continuing improvement in the US labor market conditions, which might lead to the central bank considering a rate-hike earlier-than-expected.
Nonfarm payroll employment change, seasonally adjusted, August 2012 – August 2014
Source: US DEPARTMENT OF LABOR
Source: US DEPARTMENT OF LABOR
In the run-up to the NFP data, important economic data scheduled for release this week include the ADP report, which shows the number of private-sector jobs addition, is scheduled for release on Wednesday and is expected to show an addition of 206,000 new private-sector jobs in September. Also, the ISM manufacturing and non-manufacturing PMI data are scheduled for release on Wednesday and Friday respectively. Both the manufacturing activity and services sector continued expanding at a faster-than-expected pace in August and even for September the indices are expected to show continuing expansion but at a slightly slower pace. The ISM manufacturing index is expected to come-in at 58.6, down from 59.0 in August and non-manufacturing index is expected to reach 58.5, again down from August reading of 59.6. Investors will also have a look at the US trade balance data for the month of August, also scheduled for release on Friday, and expected to reach $41.0 Billion from the previous month's reading of $40.5 Billion.
Other data to watch-out from the US includes the release of a forward looking indicator of the housing sector, pending home sales, scheduled for release on Monday and the Conference Board's consumer confidence index, scheduled for release on Tuesday.
Although the US Dollar seems to have established a strong trend, but a series of economic data this week, including Friday's jobs report, could pose some risk to the broader US Dollar rally. A disappointing NFP reading, say below 200,000, could seriously deteriorate the ongoing up-trend for the US Dollar.
ECB Monetary Policy Decision
The ECB is scheduled to announce its monetary policy decision on Thursday, but ahead of that investors will closely scrutinize the Euro-zone inflation and employment data, both scheduled for release on Tuesday. The flash version of Euro-zone CPI for the month of September is expected to remain subdued at 0.3% and the unemployment rate is also expected to remain stable at 11.5% for the month of August. Meanwhile in view of a surprise cut in its benchmark rates on September-4 and announcement of fresh quantitative easing measures, in terms of purchasing non-financial private sector assets under Asset Backed Securities purchase program and purchasing covered bonds under a new covered bond purchase program, the ECB is not expected to announce any fresh moves this time. However, the ECB press conference, which will be followed by the monetary policy decision announcement and where market participants are expecting some additional details about the quantitative easing program, might trigger some volatile moves for the Euro-zone common currency, Euro. Should the ECB hint towards or announce some additional stimulus measures, it should continue suppressing Euro in the near-term.
Other Important Economic Releases
Economic data that could have a material impact on the Australian Dollar (AUD), includes PMI figures for September from Australia's largest trading partner, China, along with country's monthly retail sales and trade balance data for the month of August. Chinese PMI figures for the month of September includes HSBC's final and official manufacturing PMI, scheduled for release on Tuesday and Wednesday respectively. Meanwhile, Australian retail sales data is also scheduled for release on Tuesday, while trade balance data is scheduled for release on Thursday. Chinese economic data, specially pertaining to manufacturing activity, always has a lasting effect on AUD. Hence, any deterioration in Chinese manufacturing activity is likely to further exert pressure on the already weakening Australian Dollar.
Important data to watch from this week's UK economic calendar include key PMI readings for the month of September and trade balance data for the second quarter of 2014. The manufacturing PMI data is scheduled for release on Wednesday, Thursday's key event include construction PMI and release of services PMI is scheduled on Friday. Meanwhile, UK second quarter current account deficit, scheduled for release on Tuesday, is expected to shrink further to 16.9 Billion Pounds after a slightly higher-than-expected deficit of 18.5 Billion Pounds in the first-quarter.
“Original analysis is provided by Admiral Markets”
Admiral Markets
AdmiralMarkets.com Representative
- Messages
- 95
Lighter Economic Calendar To Restrict Big Moves
Last week's US labor market reports showed a strong rebound for the month September with the addition of 248,000 jobs and unemployment rate dropping below 6.0% for the first time since 2008. Robust jobs data helped the US Dollar Index (I.USDX) recover and register 12th consecutive week of gains. Following Friday's big gains, the US Dollar retreated on Monday from a multi-year high against a most major currencies. However,
with a relatively lighter global economic calendar, the US Dollar is poised to witness some corrective move after its recent up surge.
Major economic events lined-up for rest of the week includes the FOMC Meeting Minutes, employment data from Australia and Bank of England monetary policy decision. Here is a brief outlook on some of the major market moving events.
After last week's stellar jobs report, should the minutes of the Fed's last policy meeting continue expressing confidence in the US economic recovery, it might trigger a fresh leg of up-move and allow the US Dollar to continue with the strong up-trend. Minutes of the Fed's September policy meeting is scheduled for release on Wednesday. Market participants would now be looking for some hints to build a strong case for the central bank to consider a rate-hike earlier-than-expected.
Apart from the Fed minutes, this week's US economic calendar remains virtually devoid of any important economic releases and offers very little in terms of triggering any big moves for the US Dollar.
Meanwhile, employment data from Australia, scheduled for release on Thursday, is expected to probe some volatile moves for the Australian Dollar (AUD). This week's Australian employment report for the month of September is expected to show unemployment rate ticking higher to 6.2%, while the change in the number of employed people during the month of September is expected to show a turnaround with the consensus estimates forecasting the figure to drop sharply and come-in at -29.6K after a surprise jump to 121.0K in the previous month. Any positive surprise from the reports is likely to spark some meaningful rally for the Australian Dollar in the near-term.
Elsewhere, Bank of England's monetary policy decision could provide some momentum for traders in the Forex market. Although, the central bank is widely expected to maintain status-quo monetary policy stance and hold its benchmark interest rates at 0.5% and the asset-purchase facility target at 375 Billion Pounds; however, accompanying release of the policy statement, if any, which provides the economic outlook that influenced the policy decision, has the potential to trigger some volatility moves for GBP. Also watch-out for the UK trade balance data, scheduled for release on Friday. The UK trade deficit for the month of August is expected to better the previous month's deficit of 10.2 Billion Pounds, but remain elevated and show a deficit of 9.1 billion Pounds.
Market players will also scrutinize ECB President Mario Draghi's speech, who is scheduled to speak at the Brookings Institution in Washington DC on Thursday. Draghi's comments would be examined to infer some additional details over the recently announced quantitative easing program, which could again lead to some additional volatility for the Euro-zone common currency, Euro.
With a relatively lighter economic calendar, the Forex market is likely to move into a narrow trading range or could even possibly witness some profit-taking move for the US Dollar.
“Original analysis is provided by Admiral Markets”
Last week's US labor market reports showed a strong rebound for the month September with the addition of 248,000 jobs and unemployment rate dropping below 6.0% for the first time since 2008. Robust jobs data helped the US Dollar Index (I.USDX) recover and register 12th consecutive week of gains. Following Friday's big gains, the US Dollar retreated on Monday from a multi-year high against a most major currencies. However,
with a relatively lighter global economic calendar, the US Dollar is poised to witness some corrective move after its recent up surge.
Major economic events lined-up for rest of the week includes the FOMC Meeting Minutes, employment data from Australia and Bank of England monetary policy decision. Here is a brief outlook on some of the major market moving events.
After last week's stellar jobs report, should the minutes of the Fed's last policy meeting continue expressing confidence in the US economic recovery, it might trigger a fresh leg of up-move and allow the US Dollar to continue with the strong up-trend. Minutes of the Fed's September policy meeting is scheduled for release on Wednesday. Market participants would now be looking for some hints to build a strong case for the central bank to consider a rate-hike earlier-than-expected.
Apart from the Fed minutes, this week's US economic calendar remains virtually devoid of any important economic releases and offers very little in terms of triggering any big moves for the US Dollar.
Meanwhile, employment data from Australia, scheduled for release on Thursday, is expected to probe some volatile moves for the Australian Dollar (AUD). This week's Australian employment report for the month of September is expected to show unemployment rate ticking higher to 6.2%, while the change in the number of employed people during the month of September is expected to show a turnaround with the consensus estimates forecasting the figure to drop sharply and come-in at -29.6K after a surprise jump to 121.0K in the previous month. Any positive surprise from the reports is likely to spark some meaningful rally for the Australian Dollar in the near-term.
Elsewhere, Bank of England's monetary policy decision could provide some momentum for traders in the Forex market. Although, the central bank is widely expected to maintain status-quo monetary policy stance and hold its benchmark interest rates at 0.5% and the asset-purchase facility target at 375 Billion Pounds; however, accompanying release of the policy statement, if any, which provides the economic outlook that influenced the policy decision, has the potential to trigger some volatility moves for GBP. Also watch-out for the UK trade balance data, scheduled for release on Friday. The UK trade deficit for the month of August is expected to better the previous month's deficit of 10.2 Billion Pounds, but remain elevated and show a deficit of 9.1 billion Pounds.
Market players will also scrutinize ECB President Mario Draghi's speech, who is scheduled to speak at the Brookings Institution in Washington DC on Thursday. Draghi's comments would be examined to infer some additional details over the recently announced quantitative easing program, which could again lead to some additional volatility for the Euro-zone common currency, Euro.
With a relatively lighter economic calendar, the Forex market is likely to move into a narrow trading range or could even possibly witness some profit-taking move for the US Dollar.
“Original analysis is provided by Admiral Markets”
Admiral Markets
AdmiralMarkets.com Representative
- Messages
- 95
Can The US Dollar Witness Renewed Strength?
Last week, the US Dollar Index (I.USDX), which measures US Dollar performance against other major currencies, finally witnessed a much awaited profit-taking move after recording 12 consecutive weeks of up-surge. The FOMC meeting minutes released last week was mostly considered to be dovish, as despite of improving US economic data the Fed trimmed its GDP forecast on the back of weakening global economy and stronger domestic currency. Apart from the FOMC minutes, last week's lighter economic calendar provided little in terms of any fresh triggers for any big moves for the US Dollar.
Going forward, investors will be awaiting for the release of this week's key highlights from the US economic calendar, which include monthly retail sales data, two regional manufacturing indices along with housing data. The US economic data will be closely watched for fresh signs of strength of the ongoing US economic recovery and might also help in determining further strength for the US Dollar. Apart from the US economic data, inflation and employment data (claimant count change and unemployment rate) from UK, Euro-zone final CPI and GDP readings might also trigger some volatile moves in the Forex market. Here is a brief outlook of some of the important market-moving events scheduled during the week ahead.
From the US
The US monthly retail sales data, scheduled for release on Wednesday, is expected to have moderated in September with the consensus forecast expecting retail sales to have declined by 0.1%, while core retails sales, which excludes automobile sales , are expected to have risen by 0.2%.
This week's US manufacturing data includes the release of industrial production for the month of September and two regional manufacturing surveys, Empire State Manufacturing Index and Philly Fed Manufacturing Index, for the month of October. The Empire State Manufacturing is scheduled for release on Wednesday, while industrial production and Philly Fed Manufacturing Index are scheduled for release on Thursday. The industrial production is expected to have risen by 0.4% in September but the regional manufacturing indices are expected to show manufacturing activity declining a bit. After an unexpected up-surge to 27.5 in September, the Empire State Manufacturing Index is expected to decline and come-in at 20.3 for the month of October. Meanwhile, the Philly Fed Manufacturing Index is also expected to decline further to 19.9 in October, following a drop to 22.5 in September from 28.0 in August.
The release of government's report on building permits and housing starts for the month of September are scheduled for release on Friday. Economists expect the number of building permits to hold steady above the 1 million mark, at 1.04 million units annualized rate and housing starts are also expected to reclaim the annual pace of 1 million units in the month of September.
Also watch-out for the preliminary University of Michigan's consumer sentiment index, which is scheduled for release on Friday. The Preliminary University of Michigan's Consumer Sentiment Index is expected to remain stable and come-in at 84.3 after rising to 84.6, the highest level since Nov. 2012.
Although this week's US economic data could possibly show some moderation in the pace of economic recovery and might also lead to continuation of last week's corrective move. However, the data is unlikely to distort the medium-term bullish bias for the US Dollar, which remain intact.
Important economic releases from UK
This week's UK economic releases, which consists of annual CPI reading and employment reports, are likely to generate volatile moves for GBP pairs. The UK inflation, measured by CPI a key economic indicator, is scheduled for release on Tuesday and is expected to read 1.4% annualized rate, the lowest level since Nov. 2009. Meanwhile, the UK labor market report, scheduled for release on Wednesday, is expected to show the number of people claiming unemployment related benefits declining by 34,200 and the unemployment rate dropping further to 6.1%. Inflation data and labor market conditions remains key determinant for Bank of England's monetary policy decision, and hence would be closely scrutinized to determine the timing of a rate hike, if any, by the central bank.
Markets are already pricing in the expectations of lower inflation reading and should the employment reports also disappoint, there could be an increased possibility of GBPUSD being vulnerable to further downside in the near-term.
Euro-zone data to watch for
Ever since the ECB shifted its focus to defend the Euro-zone economy against the risk of deflation, the important of Euro-zone inflation data has risen. The Euro-zone final inflation data, scheduled for release on Thursday, is likely to remain subdued with CPI for the month of September expected to remain at 0.3%, and the core CPI expected to hold at 0.7%. Also the Euro-zone final GDP print for the second-quarter of 2014, scheduled for release on Friday, is also expected to remain unchanged at 0.0%.
Other key economic release featuring this week's Euro-zone economic calendar include German ZEW Economic Sentiment for October and industrial production data for the month of August, both scheduled for release on Tuesday.
Expectations that ECB might consider announcing further monetary stimulus measures to avoid the risk of deflation seems to limit any upside for the Euro-zone common currency, Euro. Moreover, a better-than-expected US economic data could possibly exert additional pressure on EURUSD currency pair.
“Original analysis is provided by Admiral Markets”
Last week, the US Dollar Index (I.USDX), which measures US Dollar performance against other major currencies, finally witnessed a much awaited profit-taking move after recording 12 consecutive weeks of up-surge. The FOMC meeting minutes released last week was mostly considered to be dovish, as despite of improving US economic data the Fed trimmed its GDP forecast on the back of weakening global economy and stronger domestic currency. Apart from the FOMC minutes, last week's lighter economic calendar provided little in terms of any fresh triggers for any big moves for the US Dollar.
Going forward, investors will be awaiting for the release of this week's key highlights from the US economic calendar, which include monthly retail sales data, two regional manufacturing indices along with housing data. The US economic data will be closely watched for fresh signs of strength of the ongoing US economic recovery and might also help in determining further strength for the US Dollar. Apart from the US economic data, inflation and employment data (claimant count change and unemployment rate) from UK, Euro-zone final CPI and GDP readings might also trigger some volatile moves in the Forex market. Here is a brief outlook of some of the important market-moving events scheduled during the week ahead.
From the US
The US monthly retail sales data, scheduled for release on Wednesday, is expected to have moderated in September with the consensus forecast expecting retail sales to have declined by 0.1%, while core retails sales, which excludes automobile sales , are expected to have risen by 0.2%.
This week's US manufacturing data includes the release of industrial production for the month of September and two regional manufacturing surveys, Empire State Manufacturing Index and Philly Fed Manufacturing Index, for the month of October. The Empire State Manufacturing is scheduled for release on Wednesday, while industrial production and Philly Fed Manufacturing Index are scheduled for release on Thursday. The industrial production is expected to have risen by 0.4% in September but the regional manufacturing indices are expected to show manufacturing activity declining a bit. After an unexpected up-surge to 27.5 in September, the Empire State Manufacturing Index is expected to decline and come-in at 20.3 for the month of October. Meanwhile, the Philly Fed Manufacturing Index is also expected to decline further to 19.9 in October, following a drop to 22.5 in September from 28.0 in August.
The release of government's report on building permits and housing starts for the month of September are scheduled for release on Friday. Economists expect the number of building permits to hold steady above the 1 million mark, at 1.04 million units annualized rate and housing starts are also expected to reclaim the annual pace of 1 million units in the month of September.
Also watch-out for the preliminary University of Michigan's consumer sentiment index, which is scheduled for release on Friday. The Preliminary University of Michigan's Consumer Sentiment Index is expected to remain stable and come-in at 84.3 after rising to 84.6, the highest level since Nov. 2012.
Although this week's US economic data could possibly show some moderation in the pace of economic recovery and might also lead to continuation of last week's corrective move. However, the data is unlikely to distort the medium-term bullish bias for the US Dollar, which remain intact.
Important economic releases from UK
This week's UK economic releases, which consists of annual CPI reading and employment reports, are likely to generate volatile moves for GBP pairs. The UK inflation, measured by CPI a key economic indicator, is scheduled for release on Tuesday and is expected to read 1.4% annualized rate, the lowest level since Nov. 2009. Meanwhile, the UK labor market report, scheduled for release on Wednesday, is expected to show the number of people claiming unemployment related benefits declining by 34,200 and the unemployment rate dropping further to 6.1%. Inflation data and labor market conditions remains key determinant for Bank of England's monetary policy decision, and hence would be closely scrutinized to determine the timing of a rate hike, if any, by the central bank.
Markets are already pricing in the expectations of lower inflation reading and should the employment reports also disappoint, there could be an increased possibility of GBPUSD being vulnerable to further downside in the near-term.
Euro-zone data to watch for
Ever since the ECB shifted its focus to defend the Euro-zone economy against the risk of deflation, the important of Euro-zone inflation data has risen. The Euro-zone final inflation data, scheduled for release on Thursday, is likely to remain subdued with CPI for the month of September expected to remain at 0.3%, and the core CPI expected to hold at 0.7%. Also the Euro-zone final GDP print for the second-quarter of 2014, scheduled for release on Friday, is also expected to remain unchanged at 0.0%.
Other key economic release featuring this week's Euro-zone economic calendar include German ZEW Economic Sentiment for October and industrial production data for the month of August, both scheduled for release on Tuesday.
Expectations that ECB might consider announcing further monetary stimulus measures to avoid the risk of deflation seems to limit any upside for the Euro-zone common currency, Euro. Moreover, a better-than-expected US economic data could possibly exert additional pressure on EURUSD currency pair.
“Original analysis is provided by Admiral Markets”
Admiral Markets
AdmiralMarkets.com Representative
- Messages
- 95
Can Gold Prices Rally Further?
With the IMF’s downward revision of global growth forecast and the intimation by the FOMC minutes to still consume considerable time before thinking of an interest rate hike caused the rebound in gold prices from the year’s low during last week. The yellow metal secured nearly 2.5% so far during the current month and is heading for the first back-to-back weekly rise since July. The September month which is historically considered to be a buying month due to the festival season at the world’s second largest bullion consumer, India, is likely to witness increased volatility into the gold prices due to the below mentioned reasons.
The rout of safe haven buying emanated ever since the IMF downgraded its global growth forecast for the next year and signaled that the European economy can trigger another rescission should the concerned leaders don’t take necessary steps. The IMF also upgraded the US growth forecast considering the recent improvements in their economic numbers; however, the US Dollar couldn’t witness a gain as FOMC members continued spreading the word that the world’s largest economy can face weaker days due to global pessimism. The Japanese Yen also witnessed considerable strength due to the safe haven buying after the IMF release.
In addition to the FOMC members’ comments during last week, pessimistic economic signals from the world’s largest economy continue forcing market players to weaken US Dollar by expecting a slow tapering of monetary asset purchase and a delayed rate hike by Federal Reserve.
After the Geo-Political tensions in Israel taking a stop, the crisis between Ukraine and Russia are still not calmed down and there are new protests in Hong Kong which continued providing buying support to the gold prices. Recently, the protests in Hong Kong taking wild turns after the police used forces to remove student protestors. Market players are speculating that the protests in important Chinese part can also cause the world’s largest industrial player to witness weaker days. Moreover, the situation between Russia and Ukraine can also trigger another series of geo-political crisis which in-turn can support the safe haven demand of the yellow metal.
On the physical side, the ETFs and ETPs registered first increase in their gold holdings in two weeks on Monday after the pessimism fueled risk-aversion demand during the previous week. Gold holdings in SPDR, world’s largest gold backed ETF, liquidated nearly 2 tons yesterday totaling 10.72 tons of liquidation during the month of October while the holdings in global ETPs rose by 3.7 tons on Monday which was the first increase in holdings during two weeks. Gold import from the world’s biggest two consumers, China and India respectively, signaled complex scenarios as Indian gold imports during September 2014 increased by over 450% to $3.75 billion while the China's net gold imports from Hong Kong declined in August to the lowest since May 2011. Hence, the overall physical demand counter is weak; however with the upcoming buying season in India, the Indian market players expecting higher buying due to the upcoming festival and marriage season together with the lower prices’ support.
From the technical perspective, the breakout from the descending trend channel on the Daily Chart and a reversal from important support level signals additional hike of the gold prices towards the $1265 region where 100-day EMA and 61.8% Fibonacci Retracement level of its January-March up-move resides. Moreover, a close above $1265 can cause the yellow metal to rally till $1295 - $1300, which has been a crucial medium-term zone. Alternatively, a plunge below $1230 can cause it to test $1200 and $1182 levels, breaking which chances of near-term up-move can be negates with the metal prices expected to test sub - $1150 levels.
To sum up, uncertainty surrounding the global growth and deflationary pressure at some of the developed world can continue supporting the safe haven demand of the gold. Further, the speculation concerning interest rate hike by Federal Reserve, which have been fueling US Dollar and weakening Gold prices, is also fading after the recent FOMC release, which in-turn can support the gold prices which generally trades in reverse direction to US Dollar strength.
Moreover, the festival season at the world’s second largest consumer, India, and the on-going geo-political crisis at Ukraine and Hong-Kong, can also provide considerable support to the gold prices.
However, should the Federal Reserve, in its meeting on 28 - 29 October, completes its asset purchase after a final tapering of $15 billion and conveys a message to alter interest rates, the US Dollar can regain its strength and provide considerable weakness to the Gold prices.
“Original analysis is provided by Admiral Markets”
With the IMF’s downward revision of global growth forecast and the intimation by the FOMC minutes to still consume considerable time before thinking of an interest rate hike caused the rebound in gold prices from the year’s low during last week. The yellow metal secured nearly 2.5% so far during the current month and is heading for the first back-to-back weekly rise since July. The September month which is historically considered to be a buying month due to the festival season at the world’s second largest bullion consumer, India, is likely to witness increased volatility into the gold prices due to the below mentioned reasons.
The rout of safe haven buying emanated ever since the IMF downgraded its global growth forecast for the next year and signaled that the European economy can trigger another rescission should the concerned leaders don’t take necessary steps. The IMF also upgraded the US growth forecast considering the recent improvements in their economic numbers; however, the US Dollar couldn’t witness a gain as FOMC members continued spreading the word that the world’s largest economy can face weaker days due to global pessimism. The Japanese Yen also witnessed considerable strength due to the safe haven buying after the IMF release.
In addition to the FOMC members’ comments during last week, pessimistic economic signals from the world’s largest economy continue forcing market players to weaken US Dollar by expecting a slow tapering of monetary asset purchase and a delayed rate hike by Federal Reserve.
After the Geo-Political tensions in Israel taking a stop, the crisis between Ukraine and Russia are still not calmed down and there are new protests in Hong Kong which continued providing buying support to the gold prices. Recently, the protests in Hong Kong taking wild turns after the police used forces to remove student protestors. Market players are speculating that the protests in important Chinese part can also cause the world’s largest industrial player to witness weaker days. Moreover, the situation between Russia and Ukraine can also trigger another series of geo-political crisis which in-turn can support the safe haven demand of the yellow metal.
On the physical side, the ETFs and ETPs registered first increase in their gold holdings in two weeks on Monday after the pessimism fueled risk-aversion demand during the previous week. Gold holdings in SPDR, world’s largest gold backed ETF, liquidated nearly 2 tons yesterday totaling 10.72 tons of liquidation during the month of October while the holdings in global ETPs rose by 3.7 tons on Monday which was the first increase in holdings during two weeks. Gold import from the world’s biggest two consumers, China and India respectively, signaled complex scenarios as Indian gold imports during September 2014 increased by over 450% to $3.75 billion while the China's net gold imports from Hong Kong declined in August to the lowest since May 2011. Hence, the overall physical demand counter is weak; however with the upcoming buying season in India, the Indian market players expecting higher buying due to the upcoming festival and marriage season together with the lower prices’ support.
From the technical perspective, the breakout from the descending trend channel on the Daily Chart and a reversal from important support level signals additional hike of the gold prices towards the $1265 region where 100-day EMA and 61.8% Fibonacci Retracement level of its January-March up-move resides. Moreover, a close above $1265 can cause the yellow metal to rally till $1295 - $1300, which has been a crucial medium-term zone. Alternatively, a plunge below $1230 can cause it to test $1200 and $1182 levels, breaking which chances of near-term up-move can be negates with the metal prices expected to test sub - $1150 levels.
To sum up, uncertainty surrounding the global growth and deflationary pressure at some of the developed world can continue supporting the safe haven demand of the gold. Further, the speculation concerning interest rate hike by Federal Reserve, which have been fueling US Dollar and weakening Gold prices, is also fading after the recent FOMC release, which in-turn can support the gold prices which generally trades in reverse direction to US Dollar strength.
Moreover, the festival season at the world’s second largest consumer, India, and the on-going geo-political crisis at Ukraine and Hong-Kong, can also provide considerable support to the gold prices.
However, should the Federal Reserve, in its meeting on 28 - 29 October, completes its asset purchase after a final tapering of $15 billion and conveys a message to alter interest rates, the US Dollar can regain its strength and provide considerable weakness to the Gold prices.
“Original analysis is provided by Admiral Markets”
Admiral Markets
AdmiralMarkets.com Representative
- Messages
- 95
Markets Likely To Extend Recent Volatility
Last week, the US Dollar Index (I.USDX) ended lower for a second consecutive week amid extreme volatility, which was prevalent across global financial markets. The US economic data released during the week were generally mixed, with the monthly retail sales data and Empire State manufacturing index missing expectations while industrial production and Philly Fed manufacturing index beating consensus estimates. Even weaker German ZEW Economic Sentiment and UK inflation data, which fell to a 5-year low, failed to provide any meaningful support for the US Dollar.
Going forwards, US housing market and inflation data, along with Chinese industrial production data, and GDP data from UK and China are the leading market moving events scheduled in the upcoming week's economic calendar. Apart from this, BoE and RBA monetary policy meeting minutes accompanied with UK retail sales and Australian CPI data and also flash PMI numbers from China and Euro-zone will be closely watched by market participants. Here is a brief outlook of some of the important market-moving events scheduled during the week ahead.
The beginning of the week marks with the release of RBA's October monetary policy meeting minutes and the release of top-tier Chinese economic data, GDP data for third quarter of 2014 and industrial production data for the month of September, on Tuesday. The RBA policy meeting minutes are likely to prove a non-event for the Australian Dollar (AUD), but Chinese economic data is likely to have a material impact on commodity currencies, including AUD, which always has been very sensitive to economic releases from China. The Chinese economic data would further point towards and confirm the ongoing economic slowdown in the world's second-largest economy. Consensus forecast see year-on-year GDP estimate for Q3 of 2014 to come-in at 7.2%, dropping to the lowest level since Q1 of 2009. Meanwhile, industrial production data is expected to rebound to show a 7.5% year-on-year growth, following a drop to the lowest level since Dec. 2008 in the previous month.
Other economic releases that could possibly moves AUD includes Australian quarterly CPI data for the quarter ended Sept. 2014, scheduled for release on Wednesday, and Chinese HSBC Flash Manufacturing PMI data, scheduled for release on Thursday. Australian CPI is expected to register a rise of 0.4% on a quarter-on-quarter basis, as against the rise of 0.5% recorded in the previous quarter. Meanwhile, HSBC's flash version of the Chinese manufacturing PMI for the month of October is expected to continue showing expanding manufacturing activity and match the previous months reading of 50.2. Being Australia's largest trading partner, key Chinese economic data always has a strong impact on the movement of the Australian Dollar (AUD) and a stronger Chinese economic data would extend support to AUD.
From the US, existing home sales and new home sales data will further help investors to evaluate the health of US housing market following last week's positive housing starts and building permits data. Existing home sales for September, scheduled for release on Tuesday, are expected to continue the positive momentum and rise further to an annualized rate of 5.11 million units. Meanwhile, following a strong gain in May, new home sales for the month of September, scheduled for release on Friday, are expected to retreat a bit to a seasonally adjusted annual rate of 473,000 units.
The latest reading on US headline inflation, consumer price inflation (CPI), for the month of September is scheduled for release on Wednesday, and following an unexpected drop in August, economists this time expect CPI to remain unchanged on a month-on-month basis. Meanwhile, the Core CPI, which excludes the volatile food and energy prices, is expected to register an increase of 0.2%.
This week's UK economic calendar features the release of minutes from Bank of England's latest monetary policy meeting, retail sales data for the month of September and preliminary release of UK's third-quarter GDP data and will be of keen interest for market players and could set the tone for near-term movement for GBP.
Minutes from BoE's latest policy meeting, scheduled for release on Wednesday, is not expected to show any change in the number of MPC members showing willingness to raise benchmark interest rates. Meanwhile, consumer spending, which remains supportive pillar of UK's economic recovery, is expected to have remained subdued in September with experts anticipating retail sales, scheduled on Thursday, to witness a modest decline of 0.1% this time.
This week's preliminary reading of UK's third-quarter GDP growth, scheduled on Friday, might prove to be the deciding factor for the near-term movement of GBP. Economists project the economic growth rate to mark a marginal slowdown and come-in at 0.7% after rising by 0.9% in the second-quarter.
After the UK inflation surprisingly fell to the lowest level in over 5-year, a highly diverging GDP reading is likely to decided Cable's (GBP) near-term direction. In addition to the GDP data, UK monthly retail sales data for the month of September, scheduled for release on Thursday, could also provide some momentum for GBP pairs.
Elsewhere, investors will be particularly focusing on the release of PMI data, a leading indicator of economic health, for both manufacturing and services sector from the Euro-zone. The flash reading of the PMI numbers from Euro-zone's two largest economies, France and Germany, along with the broader Euro-zone PMI for the month of October are scheduled for release on Thursday. Both, German and French, manufacturing PMI numbers are expected to reflect contraction in manufacturing activity while the overall Euro-zone PMI is expected come-in exactly at 50, the dividing point between expansion and contraction territories.
The outcome of this week’s Bank of Canada (BOC) monetary policy meeting and a subsequent press conference on Wednesday will be looked upon by market participants to decide the near-term fate for the Canadian Dollar (CAD), which fell to its lowest level since July 2012 against USD in the week gone-by. Should the comments from Governor Steven Poloz continue to show dovish outlook or further trim the economic growth outlook, it is likely to provide the catalyst for additional weakness for CAD.
As the Forex market volatility returns, investors will continue paying close attention to economic releases and the markets are expected to remain jittery. However, as the US economic recovery continues to remain on track and as markets keep expecting the Fed to end its stimulus program in October, the US Dollar seems unlikely to extend its recent weakness during the upcoming week.
“Original analysis is provided by Admiral Markets”
Last week, the US Dollar Index (I.USDX) ended lower for a second consecutive week amid extreme volatility, which was prevalent across global financial markets. The US economic data released during the week were generally mixed, with the monthly retail sales data and Empire State manufacturing index missing expectations while industrial production and Philly Fed manufacturing index beating consensus estimates. Even weaker German ZEW Economic Sentiment and UK inflation data, which fell to a 5-year low, failed to provide any meaningful support for the US Dollar.
Going forwards, US housing market and inflation data, along with Chinese industrial production data, and GDP data from UK and China are the leading market moving events scheduled in the upcoming week's economic calendar. Apart from this, BoE and RBA monetary policy meeting minutes accompanied with UK retail sales and Australian CPI data and also flash PMI numbers from China and Euro-zone will be closely watched by market participants. Here is a brief outlook of some of the important market-moving events scheduled during the week ahead.
The beginning of the week marks with the release of RBA's October monetary policy meeting minutes and the release of top-tier Chinese economic data, GDP data for third quarter of 2014 and industrial production data for the month of September, on Tuesday. The RBA policy meeting minutes are likely to prove a non-event for the Australian Dollar (AUD), but Chinese economic data is likely to have a material impact on commodity currencies, including AUD, which always has been very sensitive to economic releases from China. The Chinese economic data would further point towards and confirm the ongoing economic slowdown in the world's second-largest economy. Consensus forecast see year-on-year GDP estimate for Q3 of 2014 to come-in at 7.2%, dropping to the lowest level since Q1 of 2009. Meanwhile, industrial production data is expected to rebound to show a 7.5% year-on-year growth, following a drop to the lowest level since Dec. 2008 in the previous month.
Other economic releases that could possibly moves AUD includes Australian quarterly CPI data for the quarter ended Sept. 2014, scheduled for release on Wednesday, and Chinese HSBC Flash Manufacturing PMI data, scheduled for release on Thursday. Australian CPI is expected to register a rise of 0.4% on a quarter-on-quarter basis, as against the rise of 0.5% recorded in the previous quarter. Meanwhile, HSBC's flash version of the Chinese manufacturing PMI for the month of October is expected to continue showing expanding manufacturing activity and match the previous months reading of 50.2. Being Australia's largest trading partner, key Chinese economic data always has a strong impact on the movement of the Australian Dollar (AUD) and a stronger Chinese economic data would extend support to AUD.
From the US, existing home sales and new home sales data will further help investors to evaluate the health of US housing market following last week's positive housing starts and building permits data. Existing home sales for September, scheduled for release on Tuesday, are expected to continue the positive momentum and rise further to an annualized rate of 5.11 million units. Meanwhile, following a strong gain in May, new home sales for the month of September, scheduled for release on Friday, are expected to retreat a bit to a seasonally adjusted annual rate of 473,000 units.
The latest reading on US headline inflation, consumer price inflation (CPI), for the month of September is scheduled for release on Wednesday, and following an unexpected drop in August, economists this time expect CPI to remain unchanged on a month-on-month basis. Meanwhile, the Core CPI, which excludes the volatile food and energy prices, is expected to register an increase of 0.2%.
This week's UK economic calendar features the release of minutes from Bank of England's latest monetary policy meeting, retail sales data for the month of September and preliminary release of UK's third-quarter GDP data and will be of keen interest for market players and could set the tone for near-term movement for GBP.
Minutes from BoE's latest policy meeting, scheduled for release on Wednesday, is not expected to show any change in the number of MPC members showing willingness to raise benchmark interest rates. Meanwhile, consumer spending, which remains supportive pillar of UK's economic recovery, is expected to have remained subdued in September with experts anticipating retail sales, scheduled on Thursday, to witness a modest decline of 0.1% this time.
This week's preliminary reading of UK's third-quarter GDP growth, scheduled on Friday, might prove to be the deciding factor for the near-term movement of GBP. Economists project the economic growth rate to mark a marginal slowdown and come-in at 0.7% after rising by 0.9% in the second-quarter.
After the UK inflation surprisingly fell to the lowest level in over 5-year, a highly diverging GDP reading is likely to decided Cable's (GBP) near-term direction. In addition to the GDP data, UK monthly retail sales data for the month of September, scheduled for release on Thursday, could also provide some momentum for GBP pairs.
GDP (£billions) and quarter-on-quarter growth
Elsewhere, investors will be particularly focusing on the release of PMI data, a leading indicator of economic health, for both manufacturing and services sector from the Euro-zone. The flash reading of the PMI numbers from Euro-zone's two largest economies, France and Germany, along with the broader Euro-zone PMI for the month of October are scheduled for release on Thursday. Both, German and French, manufacturing PMI numbers are expected to reflect contraction in manufacturing activity while the overall Euro-zone PMI is expected come-in exactly at 50, the dividing point between expansion and contraction territories.
The outcome of this week’s Bank of Canada (BOC) monetary policy meeting and a subsequent press conference on Wednesday will be looked upon by market participants to decide the near-term fate for the Canadian Dollar (CAD), which fell to its lowest level since July 2012 against USD in the week gone-by. Should the comments from Governor Steven Poloz continue to show dovish outlook or further trim the economic growth outlook, it is likely to provide the catalyst for additional weakness for CAD.
As the Forex market volatility returns, investors will continue paying close attention to economic releases and the markets are expected to remain jittery. However, as the US economic recovery continues to remain on track and as markets keep expecting the Fed to end its stimulus program in October, the US Dollar seems unlikely to extend its recent weakness during the upcoming week.
“Original analysis is provided by Admiral Markets”
Admiral Markets
AdmiralMarkets.com Representative
- Messages
- 95
FOMC and US GDP Data To Drive The Market
Following a two week of consecutive losses amid extreme volatility, the US Dollar ended the previous week with some strength against EUR, JPY, NZD and GBP but remained subdued against its Australian (AUD) and Canadian (CAD) counterparts. Strong US housing market data benefited the overall US Dollar Index (I.USDX), which ended the week gone by with some modest gains.
Going forward, the FOMC decision and advance estimate of US GDP for the third-quarter of 2014 are the highlights from this week's economic calendar.
The government is scheduled to release the first estimate of US economic growth for the third-quarter of 2014 on Thursday. After registering a solid growth of 4.6% annualized rate in the second quarter, economists are expecting the growth momentum to continue with the consensus estimating the economy to have grown by 3.1% in the third quarter. The steady pace of economic growth coupled with an addition of over 200,000 jobs in last five months out of six reflects the fundamental strength of the US economy, resulting into expectations of the Fed ending its bond-purchase program this week. After a two-day meeting, ending on Wednesday, the Fed is expected to end its monetary stimulus program but is still expected to provide a forward guidance to keep lower interest rates for "considerable time".
Data pertaining to durable goods orders will be keenly watched to further support the optimistic views of a steady US economic growth trajectory. Durable and core durable goods (excluding transportation items) orders data are scheduled for release on Tuesday. Orders for durable goods, which also includes transportation items, are predicted to register a modest growth of 0.4% while core durable goods are expected to have risen by 0.5%.
Other important economic data featuring this week's US economic calendar also include the release of a forward-looking indicator of the US housing market, pending home sales, for the month of September, which is scheduled for release on Monday. Following an unexpected drop in the previous month, pending sales are expected to show a rise of 1.1% in September. Also watch-out for Conference Board's consumer confidence index for October, a leading indicator of consumer spending, scheduled for release on Tuesday, Chicago PMI and revised UoM consumer sentiment data for the month of October, both scheduled for release on Friday.
Although, the Fed is not expected to divert from its dovish economic outlook, this week's releases will add to the expectations of continuing economic growth in the second half of 2014. Stronger US GDP data accompanied with week's positive economic data would better represent strength of the US economic recovery. This would eventually provide additional support, resulting into a stronger US Dollar for medium to long-term.
Ahead of the ECB's monthly monetary policy decision on November 6th, investors will closely scrutinize this week's preliminary Euro-zone CPI data for the month of October and unemployment rate for the month of September, both scheduled for release on Friday. The flash version of Euro-zone CPI for October is expected to remain subdued at 0.4% and the unemployment rate for September is also expected to remain elevated at 11.5%.
With very little in terms of any major economic trigger from the Euro-zone, a high degree of deviation from the expected data points could fuel re-emergence of the recent rise in volatility witnessed in the Euro-zone common currency, Euro.
Elsewhere, the Bank of Japan (BoJ) is scheduled to announce it monetary policy decision on Friday. The announcement is scheduled be followed by a press-conference and also accompanied by BoJ's semi-annual economic outlook report, which is looked upon as a forward guidance of monetary policy. Any hints of any additional monetary stimulus measure announcement by BoJ in the future is likely to trigger fresh bought of weakness for the Japanese currency, JPY.
Meanwhile, the official Chinese Manufacturing PMI data for October is scheduled for release on Saturday. Chinese manufacturing PMI data helps investors to gauge economic health of the world's second-largest economy and being World's largest consumer of commodities, Chinese economic data is always in focus for any material impact on commodity currencies, including the Australian Dollar (AUD).
“Original analysis is provided by Admiral Markets”
Following a two week of consecutive losses amid extreme volatility, the US Dollar ended the previous week with some strength against EUR, JPY, NZD and GBP but remained subdued against its Australian (AUD) and Canadian (CAD) counterparts. Strong US housing market data benefited the overall US Dollar Index (I.USDX), which ended the week gone by with some modest gains.
Going forward, the FOMC decision and advance estimate of US GDP for the third-quarter of 2014 are the highlights from this week's economic calendar.
The government is scheduled to release the first estimate of US economic growth for the third-quarter of 2014 on Thursday. After registering a solid growth of 4.6% annualized rate in the second quarter, economists are expecting the growth momentum to continue with the consensus estimating the economy to have grown by 3.1% in the third quarter. The steady pace of economic growth coupled with an addition of over 200,000 jobs in last five months out of six reflects the fundamental strength of the US economy, resulting into expectations of the Fed ending its bond-purchase program this week. After a two-day meeting, ending on Wednesday, the Fed is expected to end its monetary stimulus program but is still expected to provide a forward guidance to keep lower interest rates for "considerable time".
Data pertaining to durable goods orders will be keenly watched to further support the optimistic views of a steady US economic growth trajectory. Durable and core durable goods (excluding transportation items) orders data are scheduled for release on Tuesday. Orders for durable goods, which also includes transportation items, are predicted to register a modest growth of 0.4% while core durable goods are expected to have risen by 0.5%.
Other important economic data featuring this week's US economic calendar also include the release of a forward-looking indicator of the US housing market, pending home sales, for the month of September, which is scheduled for release on Monday. Following an unexpected drop in the previous month, pending sales are expected to show a rise of 1.1% in September. Also watch-out for Conference Board's consumer confidence index for October, a leading indicator of consumer spending, scheduled for release on Tuesday, Chicago PMI and revised UoM consumer sentiment data for the month of October, both scheduled for release on Friday.
Although, the Fed is not expected to divert from its dovish economic outlook, this week's releases will add to the expectations of continuing economic growth in the second half of 2014. Stronger US GDP data accompanied with week's positive economic data would better represent strength of the US economic recovery. This would eventually provide additional support, resulting into a stronger US Dollar for medium to long-term.
Ahead of the ECB's monthly monetary policy decision on November 6th, investors will closely scrutinize this week's preliminary Euro-zone CPI data for the month of October and unemployment rate for the month of September, both scheduled for release on Friday. The flash version of Euro-zone CPI for October is expected to remain subdued at 0.4% and the unemployment rate for September is also expected to remain elevated at 11.5%.
With very little in terms of any major economic trigger from the Euro-zone, a high degree of deviation from the expected data points could fuel re-emergence of the recent rise in volatility witnessed in the Euro-zone common currency, Euro.
Elsewhere, the Bank of Japan (BoJ) is scheduled to announce it monetary policy decision on Friday. The announcement is scheduled be followed by a press-conference and also accompanied by BoJ's semi-annual economic outlook report, which is looked upon as a forward guidance of monetary policy. Any hints of any additional monetary stimulus measure announcement by BoJ in the future is likely to trigger fresh bought of weakness for the Japanese currency, JPY.
Meanwhile, the official Chinese Manufacturing PMI data for October is scheduled for release on Saturday. Chinese manufacturing PMI data helps investors to gauge economic health of the world's second-largest economy and being World's largest consumer of commodities, Chinese economic data is always in focus for any material impact on commodity currencies, including the Australian Dollar (AUD).
“Original analysis is provided by Admiral Markets”
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