Weekly Outlook: 2017, October 01 - October 08

The US dollar held its ground as Q3 reached its end. The first week of the last quarter features the all-important US Non-Farm Payrolls with a full buildup this time. In addition, we have a rate decision in Australia, a jobs report in Canada and more Here are the highlights for the upcoming week.

1. US ISM Manufacturing PMI: Monday, 14:00. A small slide to 57.9 is expected now.
2. Australian rate decision: Tuesday, 3:30. The Reserve Bank of Australia is firmly in “neutral”. In a recent public appearance by RBA Governor Phillip Lowe, he reiterated that interest rates are set to remain stable for the time being. The language about the Australian dollar will be interesting to watch in the statement. The RBA has complained about the exchange rate but not in an aggressive manner. Will it change now?
3. UK Services PMI: Wednesday, 8:30. It is now projected to tick up to 53.3.
4. ADP Non-Farm Payrolls: Wednesday, 12:15. A much lower number is forecast now: only 151K.
5. ISM Non-Manufacturing PMI: Wednesday, 14:00. A similar figure is estimated for September: 55.5 points. The employment component is specifically eyed as a hint towards the NFP.
6. Janet Yellen talks: Wednesday, 19:15. The Chair of the Fed delivers opening remarks at a conference in Saint Louis. She is not set to address monetary policy but any reflection on the latest data such as the drop in the core PCE, could move markets. In her latest speech in Cleveland, Yellen managed to strike a fine balance and did not add much onto what she said in the recent rate decision.
7. ECB Meeting minutes: Thursday, 11:30. In its recent decision, the European Central Bank told us that it will probably make a decision in October. The minutes from that September meeting are released now, as we near the October meeting. Any details about the anticipated decision about QE tapering will move markets. A slower tapering will hurt the euro while a quicker end will boost it.
8. US Non-Farm Payrolls: Friday, 12:30. The unemployment rate rose to 4.4% and no change is expected. Wage growth is no less important than the gain in jobs. The Fed still intends to raise rates in December, but if the data is not supportive, they could certainly change their minds.
9. Canadian jobs report: Friday, 12:30. The Canadian jobs market is looking good in 2017. Back in August, the economy gained 22.2K jobs and the unemployment rate dropped to 6.2%. We could see some stability in job growth now.
10. Bill Dudley talks: Friday, 16:15. The President of the New York Fed is often seen as No. 3. With the imminent retirement of No 2, Vice Chair Stanley Fischer, Dudley’s words become even more important. He used to be a dove, but in general, toes the line. Any hints about the timing of the next hike could move markets.

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GBP/USD slipped from the highs amid Brexit worries and a strengthening of the US dollar. Has it peaked? The upcoming week features the PMIs as well as other indicators. Here are the key events and an updated analysis for GBP/USD.

1. Manufacturing PMI: Monday, 8:30.
2. Construction PMI: Tuesday, 8:30.
3. FPC Meeting Minutes: Tuesday, 8:30. The minutes from the Financial Policy Committee’s meeting could provide more insight about the rapid growth in credit. The Bank of England is worried about growing debt among UK households.
4. BRC Shop Price Index: Tuesday, 23:01. The figure dropped by 0.3% in August.
5. Services PMI: Wednesday, 8:30.
6. Housing Equity Withdrawal: Thursday, 8:30. We now get the figure for Q2.
7. Halifax HPI: Friday, 7:30. This early indicator of home prices has shown a rise in August: 1.1%, beating expectations. A slowdown in housing is closely watched.

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EUR/USD tumbled down, mostly on the German elections. Has the pair changed its course or is it only a correction? The first week of Q4 features the ECB meeting minutes and PMIs among other events. Here is an outlook for the highlights of this week.

1. Manufacturing PMIs: Monday morning: 7:15 for Spain, 7:45 for Italy, final French figure at 7:50, final German number at 7:55 and the final all-European number at 8:00.
2. Unemployment Rate: Monday, 9:00. The unemployment rate in the euro-zone is falling and this is encouraging. The rate stood at 9.1% in July.
3. Spanish Unemployment Change: Tuesday, 7:00. The fourth-largest economy still suffers from high unemployment and the improvement is closely watched. In addition, Spain releases its data quite early, just after the month ends. In August, the number of the unemployed rose by 46.4K, falling short of expectations.
4. PPI: Tuesday, 9:00. Prices remained flat in July. We now get the figure for August.
5. Services PMIs: Wednesday morning: 7:15 for Spain, 7:45 for Italy, final French figure at 7:50, final German number at 7:55 and the final all-European number at 8:00.
6. Retail Sales: Wednesday, 9:00. A drop of 0.3% was seen in July.
7. Retail PMI: Thursday, 8:10.
8. ECB Meeting minutes: Thursday, 11:30. In its recent decision, the European Central Bank told us that it will probably make a decision in October. The minutes from that September meeting are released now, as we near the October meeting. Any details about the anticipated decision about QE tapering will move markets. A slower tapering will hurt the euro while a quicker end will boost it.
9. German Factory Orders: Friday, 6:00.
10. French Trade Balance: Friday, 6:45. Another deficit is on the cards now.

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The Australian dollar was on the back foot, partly due to the “risk off” sentiment. Is the battle for 0.80 over? The rate decision is the big event for the week, but certainly not the only one. Here are the highlights of the week.

1. AIG Manufacturing Index: Sunday, 22:30.
2. MI Inflation Gauge: Monday, 00:00. A similar figure is likely.
3. HIA New Home Sales: Tuesday, 00:00. The Housing Industry Association has reported two months of drops in sales of new homes. After a slide of 3.7% in July, we could see a bounce in the report for August.
4. Building Approvals: Tuesday, 00:30. Volatility is expected to continue in August.
5. Rate decision: Tuesday, 3:30. The Reserve Bank of Australia is firmly in “neutral”. In a recent public appearance by RBA Governor Phillip Lowe, he reiterated that interest rates are set to remain stable for the time being. The language about the Australian dollar will be interesting to watch in the statement. The RBA has complained about the exchange rate but not in an aggressive manner. Will it change now?
6. Commodity Prices: Tuesday, 5:30. Goldman Sachs recently said that iron prices are set to continue rising.
7. AIG Services Index: Tuesday, 22:30.
8. Retail Sales: Thursday, 00:30.
9. Trade Balance: Thursday, 00:30. Australia had a trade surplus in June, but it came out below expectations for the second month in a row. After 0.46 billion in June, we could see a wider surplus now for July.
10. AIG Construction Index: Thursday, 22:30.

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