Weekly Outlook: 2016, May 15 - May 22

Forex Weekly Outlook May 16-20

The US dollar had another positive week, enjoying some good data. UK and US inflation data, housing figures and most importantly the FOMC Meeting Minutes stand out. These are the highlights of this week.

1. UK inflation data: Tuesday, 8:30. CPI in the UK is expected to rise by 0.5% in April.
2. US Building Permits: Tuesday, 12:30. The number of building permits is expected to rise to 1.13 million-unit pace.
3. US inflation data: Tuesday, 12:30. CPI is forecasted to rise 0.4% while core prices are estimated to climb 0.2% this time.
4. UK employment data: Wednesday, 8:30. The amount of people receiving jobless benefits is expected to rise by 4,100 in April.
5. US Crude Oil Inventories: Wednesday, 14:30. The EIA expects Brent to trade at $76 a barrel in the next year on continued increase in demand.
6. US FOMC Meeting Minutes: Wednesday, 18:00. These are the meeting minutes from the April decision, in which the Fed left policy unchanged, acknowledged some improvement but did provide any hike hints. The chances for a rate hike in June dropped after that meeting but since then, data has improved. So, this is an opportunity for the Fed to hint about raising rates in June, if this is indeed the case, and it’s quite unclear that this a real option for the doves that control the Fed. It is important to remember that the minutes are edited until the last moment, allowing the Fed to sharpen any message.
7. Australian employment data: Thursday, 1:30. Australia’s job market is expected to register 12,300 jobs addition, while the unemployment rate is expected to rise to 5.8% this time.
8. US Philly Fed Manufacturing Index: Friday, 12:30. Jobless claims are estimated to reach 276,000 this week.
9. US Existing Home Sales: Friday, 14:00.

the source

US Dollar Forecast – Dollar Forges Bullish Reversal but May Struggle to Maintain Lift
The Greenback advanced against all of its major counterparts this past week, and the USDollar secured its strongest two-week rally since the May 2015 climb forestalled a bearish reversal.

British Pound Forecast - Mixed U.K./U.S. Data to Foster Range-Bound Conditions for GBP/USD
Mixed data prints coming out of the U.S. & U.K. may foster range-bound prices in GBP/USD especially as the Federal Reserve and the Bank of England (BoE) retain a wait-and-see approach for monetary policy.

Chinese Yuan (CNH) Forecast – Eco Policies, Commodity Volatility Add Mixed Moves to the Yuan
The onshore Yuan (CNY) extended losses against the US Dollar on Friday after PBOC fixed the daily reference rate to the weakest level in two months, to 6.5246.

Australian Dollar Forecast - Australian Dollar Torn Between RBA Bets, Sentiment TrendsTitle
The Australian Dollar may find itself torn between the influence of RBA monetary policy expectations and market-wide risk sentiment trends in the week ahead.

Gold Forecast – Gold Bulls Look to CPI, Fed Minutes for Solace
Gold prices are lower for a second consecutive week with the previous metal off 1.26% to trade at 1272 ahead of the New York close on Friday.

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Economic Calendar Of The Week - May 16-20, 2016

The US dollar had another positive week, enjoying some good data. UK and US inflation data, housing figures and most importantly the FOMC Meeting Minutes stand out. These are the highlights of this week. Join us as we explore the market movers on Forex calendar.

US jobless claims posted a higher than expected reading of 294,000. The 20,000 addition reached the highest level since February 2015. However, the positive trend that began early in May continued for the dollar, especially as retail sales beat expectations, something that doesn’t usually happen. The fear of a Brexit, highlighted by the BOE, is one possible reason to wait.

This week’s crop of economic data manages to strike a pleasing balance between volume and importance. Almost every day there is enough of sufficient importance to warrant investor’s attention, without overwhelming them in frequency.

US data includes Fed minutes and CPI numbers, with the former particularly interesting. If the doves on the FOMC were in the ascendancy at the last meeting, then subsequent US data will only have emboldened them to keep on warning about the dangers of higher rates. U.S. consumer prices barely moved in March rising 0.1% showing little reason for interest rate hikes in the near future. The lukewarm inflation figures do not reflect the ongoing improvement in the job market. The CPI declined 0.2% in February. CPI is forecasted to rise 0.4% while core prices are estimated to climb 0.2% this time.

UK data also comes into focus, including CPI numbers and employment figures; Brexit dominated last week, but with the UK economy still lackluster, the focus will be on whether there is any improvement in underlying data. Employment numbers will keep trader’s attention in the UK this week. The number of people receiving jobless benefits increased by 6,700 in March, missing predictions for an 11,900 cut. The jobless-claims rate remained at 2.1%. BOE said recruitment in April was nearly unchanged showing muted employment growth. Meanwhile, U.K. unemployment edged up for the first time in seven months and employers added fewer jobs than forecast, suggesting the labor market is losing momentum. The number of people looking for work climbed by 21,000 to 1.7 million in the three months through February. In light of these figures, the Bank of England is in no hurry to raise interest rates anytime soon and the June 23 EU vote is starting to weigh on UK economic growth. The amount of people receiving jobless benefits is expected to rise by 4,100 in April.

With no Federal Reserve meeting until late June Fed speaker’s hawkish tones have helped the US dollar rally. This week all eyes will focus on the Fed minutes. These are the meeting minutes from the April decision, in which the Fed left policy unchanged, acknowledged some improvement but did provide any hike hints. The chances for a rate hike in June dropped after that meeting but since then, data has improved. So, this is an opportunity for the Fed to hint about raising rates in June, if this is indeed the case, and it’s quite unclear that this a real option for the doves that control the Fed. It is important to remember that the minutes are edited until the last moment, allowing the Fed to sharpen any message.