Weekly Outlook: 2017, November 05 - November 12

The US dollar was mixed across the board despite big events in markets. Will this continue? The upcoming week features events from all over the world. Here are the highlights for the upcoming week.

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1. FOMC’s Dudley talks: Monday, 17:10. The President of the New York Fed is a permanent voter and this speech in New York will be an opportunity to react to the nomination of Powell as Fed Chair, as well as the Fed’s classification of inflation as “soft” rather than transitory.
2. Australian rate decision: Tuesday, 3:30.
3. US JOLTS Job Openings: Tuesday, 15:00. Just after the Non-Farm Payrolls report, we get a belated, yet meaningful figure for the Fed. The number of job openings and quits serves as a gauge of the wider jobs market. Back in August, the number of opening stood at 6.08 million, maintaining the high ground above 6 million. A similar figure is likely now: 5.98 million.
4. New Zealand rate decision: Wednesday, 20:00. The interest rate stands at 1.75% since late 2016, when it was last reduced. The big downfall of the exchange rate should keep the acting governor Grant Spence and his team happy and they are unlikely to cut interest rates. The new Labour-led government is expected to change the mandate of the RBNZ, and this point will also feature
5. US jobless claims: Thursday, 13:30. A small rise from 229K to 231K is on the cards.
6. US consumer confidence: Friday, 15:00. A score of 101 is projected.

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EUR/USD was looking for a new direction in a busy week. What’s next? The common currency faces yet another busy week with PMIs, trade balance and more. Here is an outlook for the highlights of this week.

Attachment 29471

1. Eurogroup Meetings: Monday. The finance ministers of the euro-zone convene in Brussels to discuss current matters. The crisis in Catalonia and its economic impact, rising growth and the changes in the ECB’s policy will all be on the table. Any statements regarding closer cooperation will be welcomed by the euro. The finance ministers of all the EU countries will convene on Tuesday, but the bigger decisions are taken between the euro area ministers.
2. German Factory Orders: Monday, 7:00. We now get the figures for September where a drop of 1% is expected.
3. Services PMIs: Monday: Spain at 8:15, Italy at 8:45, final French number at 8:50, final German figure at 8:55 and the final euro-zone number at 9:00.
4. Sentix Investor Confidence: Monday, 9:30. Another rise is projected now, to 31.2 points.
5. PPI: Monday, 10:00. A rise of 0.4% is forecast.
6. German Industrial Production: Tuesday, 7:00. A drop of 0.7% is estimated now.
7. Retail PMI: Tuesday, 9:10.
8. Retail Sales: Tuesday, 10:00. An increase of 0.6% is on the cards.
9. French Trade Balance: Wednesday, 7:45. A deficit of 4.7 billion is predicted.
10. German Trade Balance: Thursday, 7:00. A surplus of 23.1 billion is forecast, larger than last time.
11. ECB Economic Bulletin: Thursday, 9:00. Two weeks after the ECB decision, they publish the data that they had before them while making their decision. We may get a few more insights about the optimism that led to cutting back the bond-buying program to 30 billion per month and also the caution that led to leaving the door open to further bond-buys after September 2018.
12. EU Economic Forecasts: Thursday, 10:00. The European Commission releases updated economic forecasts three times a year. Given the recent upbeat GDP figures, the EC may upgrade its forecasts. Forecasts for individual countries could focus on Spain, given the Catalan crisis.
13. German CPI (final): Friday, 7:00.
14. French Industrial Production: Friday, 7:45. A rise of 0.6% is projected.

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GBP/USD had a mixed week amid big events. The upcoming week may be calmer but still, consists of important events. The trade balance and industrial output stand out. Here are the key events.

Attachment 29470

1. BRC Retail Sales Monitor: Tuesday, 00:01.
2. Halifax HPI: Tuesday, 8:30. The RBS has reported three consecutive months of rises in house prices, with a surprisingly robust rise of 0.8% in September. A more modest advance is likely this time: +0.2%.
3. RICS House Price Balance: Thursday, 00:01. A drop to 4% is on the cards.
4. NIESR GDP Estimate: Thursday, 13:00. We now receive the growth rate for August to October.
5. Manufacturing Production: Friday, 9:30. A small increase of 0.3% is predicted.
6. Goods Trade Balance: Friday, 9:30. A narrower deficit of 12.9 billion is on the cards.
7. Construction Output: Friday, 9:30. A slide of 0.6% is forecast.

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Dollar/yen got used to the 113 handle early in the week and attempts to settle above 114 were heavily fought by sellers. The Fed decision, the nomination of a new Fed Chair and the NFP all moved the pair, but the ranges were not challenged.

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"It certainly was a busy week. The Bank of Japan made no changes to its policy and seems to be pleased with the weaker yen. The Fed also kept interest rates unchanged. Despite an acknowledgment that inflation is “soft”, the Fed refrained from sending a signal that it will not raise rates."

"Jay Powell has been nominated by Trump as the next Fed Chair. The move was well-telegraphed and he represents continuation rather than a change. This is not helpful to the US dollar.The Non-Farm Payrolls disappointed, especially on wages. Salaries are up only 2.4% y/y, not enough to push inflation higher."

"The upcoming week is not as busy, but US building permits, housing starts, and consumer confidence should provide some action. Also note a speech from the President of the New York Fed, the first after the nomination of Powell."

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The Australian dollar struggled to recover amid mixed data. The highlight of the upcoming week is undoubtedly the rate decision by the RBA. Will they hint about a rate cut?. Here are the highlights of the week.

Attachment 29460

1. MI Inflation Gauge: Monday, 00:00. A return to the previous level of around 0.1% could be seen now.
2. ANZ Job Advertisements: Monday, 00:30. The Australia and New Zealand Banking Group monitors the number of job ads as another gauge of the labor market. Ads remained unchanged back in September. We now get data for October.
3. AIG Construction Index: Monday, 22:30.
4. Rate decision: Tuesday, 3:30. The Reserve Bank of Australia has a neutral stance regarding rates. However, in a recent speech, we learned that at least one member leans to a rate cut. Since then, inflation figures came out and they were quite poor. Will the RBA open the door to a rate cut? That could be interesting. On the other hand, the recent drop int he value of the Aussie makes life easier for policymakers.
5. Chinese Trade Balance: Wednesday, 2:00. China is Australia’s No. 1 trade partner. The publication of the trade balance also provides a view into the changes in imports. Chinese imports consist of Australian metal exports. In September, China reported a surplus of 28.5 billion USD.A 39.5 billion surplus is on the cards now.
6. Home Loans: Thursday, 00:30. The figure for September is expected to be +2.1%.
7. RBA Monetary Policy Statement: Friday, 00:30. The RBA has another chance to influence the currency late in the week. The quarterly statement may provide insights about inflation and hints towards further moves. In the past, this document certainly had its impact on the A$.

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Dollar/CAD continued experiencing upward pressure amid the top-tier figures from Canada. The upcoming week seems a bit calmer at least if we look at the calendar, but it provides a focus on the housing sector. Where will the C$ go next?

Attachment 29459

1. Ivey PMI: Monday, 15:00. e now receive data for October which is expected to show 60.2 points.
2. Stephen Poloz talks: Tuesday, 17:45. The Governor of the Bank of Canada will speak in Montreal and may respond to the latest data: the jobs report and the GDP publications. He may hint about monetary policy in 2018.
3. Housing Starts: Wednesday, 13:15. 220K is expected now.
4. Building Permits: Wednesday, 13:30.
5. NHPI: Thursday, 13:30. A small gain of 0.2% is projected now.

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