Weekly Outlook: 2017, October 08 - October 15

Weekly Outlook: 2017, October 08 - October 15

The US dollar remained strong and enjoyed mostly upbeat data. Can we expect further gains? The focus remains on the greenback with the FOMC minutes, US retail sales and the all-important inflation figures Here are the highlights for the upcoming week.

1. JOLTS Job Openings: Wednesday, 14:00. A level of 6.06 is on the cards now.
2. FOMC Meeting Minutes: Wednesday, 18:00. In the September, meeting, the announced the beginning of reducing its balance sheet, as widely expected. They also left their rate hike projections unchanged for 2017 (one more hike) and 2018 (3 hikes). The eagerness to continue raising rates comes despite slower inflation, something that Fed Chair Yellen described as a “mystery”. The minutes from that meeting are released now. It is important to note that the text is edited until the very last minute, leaving room for sending the desired message to markets. The focus will be on how worried they are of low inflation.
3. US PPI: Thursday, 12:30. Headline PPI is expected to rise by 0.4% while the core number is predicted to advance by 0.2%.
4. Mario Draghi talks: Thursday, 14:15. The President of the ECB will talk in a panel in Washington and may shed some more light on the upcoming decision to reduce its bond-buying scheme. Will he still express concern about the exchange rate? EUR/USD is lower since he voiced his complaints.
5. Lael Brainard talks: Thursday, 14:15. Brainard is a permanent voter in the FOMC and her opinions are in line with the majority. She could provide a valuable to the latest jobs report and more importantly, about the potential rate hike in December.
6. Jerome Powell talks: Thursday, 14:30 and also Friday at 17:00. Powell is also a Fed Governor who rarely discusses monetary policy. Nevertheless, his words are of higher importance now as he is one of the candidates to head the Fed. In his previous appearance, Powell did not offer insights about interest rates.
7. US CPI: Friday, 12:30. Headline CPI is expected to rise by 0.6% this time, while core CPI by only 0.2%.
8. US retail sales: Friday, 12:30.Overall sales volume is predicted to bounce back by 1.5% and core sales by 0.9%.
9. US consumer sentiment: Friday, 14:00. We now get the preliminary release for October which is forecast to be very similar: 95.4 points.

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EUR/USD was under pressure once again, dropping for the second week in a row. The upcoming week’s highlight is a speech by Mario Draghi. Here is an outlook for the highlights of this week.

1. German Industrial Production: Monday, 6:00.
2. Sentix Investor Confidence: Monday, 8:30. This 2800 strong survey has stabilized on high ground in recent months. Back in September, it reached 28.2 points. Another small rise to 28.6 is on the cards for October.
3. German Trade Balance: Tuesday, 6:00. German exports keep its trade balance positive. In July, the country recorded a surplus of 19.5 billion, slightly below expectations. A surplus of 20.1 billion is expected now.
4. French Industrial Production: Tuesday, 6:45. The second-largest economy in the euro-zone saw its industrial output rise by 0.5% in July. The same rate is expected now.
5. French CPI (final): Thursday, 6:45. This is the final read for September. The drop of 0.1% that was originally reported will likely be confirmed in the final read.
6. Industrial Production: Thursday, 9:00. The euro-zone saw a modest growth in in its industrial production in July: 0.1%. A higher growth rate of 0.6% is on the cards now, but it is important to note that expectations may change after both Germany and France release their own numbers.
7. Mario Draghi talks: Thursday, 14:15. The President of the European Central Bank will participate in a panel in Washington. Draghi has an opportunity to hint about the upcoming ECB meeting, where a decision on reducing QE is expected. In early September, Draghi complained about the exchange rate, over and over again. While the markets ignored him at the time, EUR/USD is some 300 pips lower since then. Will he lower his tone about the euro? He may also be asked about the latest political developments, but will probably dodge these questions.
8. German CPI (final): Friday, 6:00.Germany reported a small rise in price in September, 0.1%. The final read will likely confirm the initial one.

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GBP/USD extended its falls amid Brexit uncertainty and unimpressive economic data. Will it head below 1.30? The upcoming week features industrial output, the trade balance and more. Here are the key events for GBP/USD.

1. BRC Retail Sales Monitor: Monday, 23:00. The British Retail Consortium has shown a rise in sales in the past three months, a positive sign after some worries beforehand. After an advance of 1.3% in August, perhaps we will see a slide in September.
2. Industrial output: Tuesday, 8:30. While the UK economy leans heavily towards services, the industry still plays an important role. A rise of 0.2% was seen in industrial production back in July. The narrower manufacturing production advanced by 0.5% and is now expected to rise by 0.3%.
3. Goods Trade Balance: Tuesday, 8:30. Britain suffers from a trade deficit, which has worsened in the past year. A deficit of 11.6 billion was recorded in July. A similar deficit is on the cards now: 11.2 billion.
4. Construction Output: Tuesday, 8:30. The construction sector is suffering from contraction according to the latest PMI by Markit. It will be interesting to see if we will see another fall after -0.9% in July. A small rise is forecast now: 0.1%.
5. NIESR GDP Estimate: Tuesday, 12:00. The National Institute of Economic and Social Research provides a running estimate of GDP. In the three months ending in August, it showed a growth rate of 0.4%, better than in previous months. We will now get the figure for June to September, which is exactly Q3.
6. RICS House Price Balance: Wednesday, 23:01. The Royal Institution of Chartered Surveyors publishes a monthly diffusion index for the housing sector. It almost fell to the negative ground in July but bounced back to 6%. A small slide to 4% is estimated now.
7. BOE Credit Conditions Survey: Thursday, 8:30. The Bank of England’s report on credit conditions is watched for rate hike assessments. If conditions are too loose, the BOE has higher incentives to raise rates.
8. CB Leading Index: Friday, 13:30. This composite index uses 7 indicators, most of them already public. Nevertheless, it is of interest. A drop of 0.1% was recorded in July.

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