Weekly Outlook: 2014, September 21 - September 28

AUD/USD weekly outlook: September 22 - 26

The Australian dollar slumped to a more than six-month low against its U.S. counterpart on Friday, as growing expectations that the Federal Reserve will begin to raise rates sooner than previously thought boosted demand for the greenback.

AUD/USD hit a daily low of 0.8921 on Friday, a level not seen since March 4, before subsequently consolidating at 0.9038 by close of trade, down 0.66% for the day and 1.19% lower for the week.

The pair is likely to find support at 0.8888, the low from March 3 and resistance at 0.8995, the high from September 18.

The Federal Reserve cut its monthly bond-buying program by another $10 billion following its two-day policy meeting on September 17, keeping the program on track to finish next month.

While the Fed reiterated that it expects rates to remain on hold for a "considerable time" after its quantitative easing program ends, it also projected a faster pace of rate hikes.

For the end of 2015, the median forecast was 1.375% compared to a June forecast of 1.125%.

Speaking at the central bank’s post-policy meeting press conference, Fed Chair Janet Yellen emphasized that the timing of the first rate hike would be data-dependent.

Meanwhile, in the minutes of its September policy meeting published on September 16, the Reserve Bank of Australia reiterated its decision to keep interest rates on hold for an extended period of time and added that the exchange rate remains "above most estimates of its fundamental value."

Data from the Commodities Futures Trading Commission released Friday showed that speculators decreased their bullish bets on the Australian dollar in the week ending September 16.

Net longs totaled 22,140 contracts, down from net longs of 41,229 in the preceding week.

In the week ahead, investors will be focusing on U.S. data on new and existing home sales, as well as reports on durable goods orders and initial jobless claims.

A recent batch of upbeat U.S. economic data underlined optimism over the strength of the economy and fuelled expectations that the Fed will begin to raise rates sooner than previously thought.

Monday, September 22

• The U.S. is to release private sector data on existing home sales.

Tuesday, September 23

• China is to release the preliminary reading of its HSBC manufacturing index. The Asian nation is Australia's largest trade partner.

Wednesday, September 24

• The Reserve Bank of Australia is to publish its financial stability review.
• The U.S. is to publish data on new home sales.

Thursday, September 25

• RBA Governor Glenn Stevens is to speak at an event in Melbourne; his comments will be closely watched.
• The U.S. is to release reports on durable goods orders and initial jobless claims.

Friday, September 26

• The U.S. is to release revised data on gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health. The U.S. is also to release revised data on consumer sentiment.

USD/CAD weekly outlook: September 22 - 26

The broadly stronger U.S. dollar gained ground against the Canadian dollar on Friday, despite data showing that the annual rate of core inflation in Canada rose at the fastest rate in over two years last month.

USD/CAD was up 0.14% to 1.0951 in late trade, off highs of 1.0980.

Demand for the greenback continued to be underpinned as indications that the economic recovery is making solid progress fuelled expectations that the Federal Reserve will hike interest rates sooner than markets are expecting.

On Wednesday the Fed offered fresh guidance on its plans to raise interest rates, outlining in more detail how it will start to raise short term interest rates when the time comes.

The Fed statement reiterated that it expects rates to remain on hold for a "considerable time", after its bond purchasing program ends, while Chair Janet Yellen stressed that the timing of any change in interest rates is dependent on the strength of the economic recovery.

The Fed also cut its monthly asset purchase program by another $10 billion, keeping the program on track to finish next month.

The loonie, as the Canadian dollar is also known, found some support after official data showed that the annual core inflation rate, which excludes volatile items such as some food and energy costs, rose 2.1% in August. It was the highest level since April 2012, and outstripped forecasts for a 1.8% increase.

The annual headline rate of inflation rose 2.1% last month, in line with forecasts and unchanged from July.

The strong increase in core inflation boosted expectations that the Bank of Canada may shift away from its neutral stance on interest rates sooner than expected.

Earlier in the week, BoC Governor Stephen Poloz said he was in no hurry to move away from the central bank's neutral rate stance amid indications that a slow recovery in Canadian exports is underway.

The week ahead will bring a fresh look at the U.S. housing sector, with reports on both new and existing home sales, as well as Thursday’s data on durable goods orders and initial jobless claims.

Tuesday’s report on Canadian retail sales will also be in focus.

Monday, September 22

• The U.S. is to release private sector data on existing home sales.

Tuesday, September 23

• Canada is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.

Wednesday, September 24

• The U.S. is to publish data on new home sales.

Thursday, September 25

• The U.S. is to release reports on durable goods orders and initial jobless claims.

Friday, September 26

• The U.S. is to round up the week with revised data on gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health. The U.S. is also to release revised data on consumer sentiment.

NZD/USD weekly outlook: September 22 - 26

The New Zealand dollar ended Friday's session close to a seven-month low against its U.S. counterpart, after the Federal Reserve brought forward its outlook for rising interest rates.

NZD/USD hit 0.8076 on Thursday, the pair’s lowest since February 4, before subsequently consolidating at 0.8121 by close of trade on Friday, down 0.39% for the day and 0.38% lower for the week.

The pair is likely to find support at 0.8076, the low from September 18, and resistance at 0.8203, the high from September 17.

The Federal Reserve cut its monthly bond-buying program by another $10 billion following its two-day policy meeting on September 17, keeping the program on track to finish next month.

While the Fed reiterated that it expects rates to remain on hold for a "considerable time" after its quantitative easing program ends, it also projected a faster pace of rate hikes.

For the end of 2015, the median forecast was 1.375% compared to a June forecast of 1.125%.

Speaking at the central bank’s post-policy meeting press conference, Fed Chair Janet Yellen emphasized that the timing of the first rate hike would be data-dependent.

Meanwhile, in New Zealand, official data released Thursday showed that the economy grew by 0.7% in the second quarter, above expectations for 0.6% growth.

Year-on-year, New Zealand's gross domestic product increased by 3.9% in the last quarter, marking the fastest growth rate since the second quarter of 2004.

Data from the Commodities Futures Trading Commission released Friday showed that speculators decreased their bullish bets on the New Zealand dollar in the week ending September 16.

Net longs totaled 1,120 contracts, down from net longs of 9,522 in the preceding week.

In the week ahead, investors will be focusing on U.S. data on new and existing home sales, as well as reports on durable goods orders and initial jobless claims.

A recent batch of upbeat U.S. economic data underlined optimism over the strength of the economy and fuelled expectations that the Fed will begin to raise rates sooner than previously thought.

Monday, September 22

• New Zealand is to release private sector data on consumer sentiment.
• The U.S. is to release private sector data on existing home sales.

Wednesday, September 24

• New Zealand is to release data on the trade balance, the difference in value between imports and exports.
• The U.S. is to publish data on new home sales.

Thursday, September 25

• The U.S. is to release reports on durable goods orders and initial jobless claims.

Friday, September 26

• The U.S. is to release revised data on gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health. The U.S. is also to release revised data on consumer sentiment.

GBP/USD weekly outlook: September 22 - 26

The pound turned lower against the broadly stronger dollar on Friday, coming off the two-week highs hit earlier in the session after voters in Scotland’s independence referendum elected to remain inside the United Kingdom.

GBP/USD was down 0.68% to 1.6284 in late trade, reversing a rally which propelled it to two-week highs of 1.6523.

Sterling also trimmed gains against the euro, with EUR/GBP at 0.7878 in late trade, off the two year lows of 0.7809 struck earlier in the session.

The pound was initially boosted after voters in Scotland chose to stay in the U.K. by a significant margin in a independence referendum, defying opinion polls which had indicated that the final result would be too close to call.

A total of 55% of voters voted to reject independence, while 45% voted in favor of it.

Sterling slumped to 10-month lows against the dollar earlier this month as uncertainty over the Scottish referendum rattled financial markets.

With the referendum issue out of the way, investors began to turn their attention back towards the Bank of England’s monetary policy stance.

Sterling rallied in the early part of the year on the back of expectations that the deepening recovery in the U.K. would prompt the BoE to raise interest rates ahead of other central banks.

However, the dollar has rallied in the past two months as economic data indicated that the U.S. recovery is progressing strongly, while the pace of the recovery in the U.K. appeared to be moderating.

On Wednesday the Federal Reserve offered fresh guidance on its plans to raise interest rates, outlining in more detail how it will start to raise short term interest rates when the time comes.

The Fed statement reiterated that it expects rates to remain on hold for a \"considerable time\", after its bond purchasing program ends, but it outlined in more detail how it will start to raise short term interest rates when the time comes.

The Fed also cut its monthly asset purchase program by another $10 billion, keeping the program on track to finish next month.

The week will bring a fresh look at the U.S. housing sector, with reports on both new and existing home sales, as well as Thursday’s data on durable goods orders and initial jobless claims. The calendar in the U.K. is light, with reports on mortgage approvals and public borrowing due on Tuesday.

Monday, September 22

• The U.S. is to release private sector data on existing home sales.

Tuesday, September 23

• The U.K. is to release private sector data on mortgage approvals, as well as a report on public sector borrowing.

Wednesday, September 24

• The U.S. is to publish data on new home sales.

Thursday, September 25

• The U.S. is to release reports on durable goods orders and initial jobless claims.

Friday, September 26

• The U.S. is to round up the week with revised data on gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health. The U.S. is also to release revised data on consumer sentiment.

EUR/USD weekly outlook: September 22 - 26

The euro fell to a fresh 14-month trough against the broadly stronger dollar on Friday as expectations that the Federal Reserve is moving closer to raising U.S. interest rates continued to bolster demand for the greenback.

EUR/USD was down 0.71% to 1.2830 in late trade, the lowest level since July 2013.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, ended Friday’s session up 0.63% to 84.93, the highest level since July 2013, capping its tenth consecutive week of gains.

The dollar has rallied in the past two months, boosted by expectations for an early hike in U.S. interest rates, while the European Central Bank looks likely to stick to a looser monetary policy stance.

On Wednesday the Fed offered fresh guidance on its plans tighten monetary policy, outlining in more detail how it will start to raise short term interest rates when the time comes.

The Fed statement reiterated that it expects rates to remain on hold for a "considerable time", after its bond purchasing program ends, while Chair Janet Yellen stressed that the timing of any change in interest rates is dependent on the strength of the economic recovery.

The Fed also cut its monthly asset purchase program by another $10 billion, keeping the program on track to finish next month.

The euro has remained under pressure against the dollar since the ECB unexpectedly cut rates to record lows across the euro zone earlier this month, and implemented fresh measures in an attempt to shore up inflation in the currency bloc.

On Thursday, euro area lenders borrowed less than expected from the ECB under its new low cost loan program.

The ECB said it allotted €82.6 billion to 255 bidders in its new Targeted Long Term Refinancing Operation, or TLTRO. That was well below the €100 to €150 billion predicted by analysts.

The low loan uptake indicated that the operation will have only a limited impact on boosting liquidity in the euro area.

The euro also ended lower against the yen on Friday, with EUR/JPY down 0.37% to 139.95, off the four month highs of 141.20 struck earlier in the session.

In the week ahead, investors will be awaiting Tuesday’s data on euro zone private sector activity, amid concerns that the recovery in the region is losing momentum.

The week will also bring a fresh look at the U.S. housing sector, with reports on both new and existing home sales, as well as Thursday’s data on durable goods orders and initial jobless claims.

Monday, September 22

• ECB President Mario Draghi is to appear before the European Parliament's Economic and Monetary Committee, in Brussels.
• The U.S. is to release private sector data on existing home sales.

Tuesday, September 23

• The euro zone is to publish preliminary data on private sector activity, while Germany and France are to also to publish data on private sector growth.

Wednesday, September 24

• The Ifo Institute is to release its report on German business climate.
• The U.S. is to publish data on new home sales.

Thursday, September 25

• The ECB is to publish data on M3 money supply and private loans.
• The U.S. is to release reports on durable goods orders and initial jobless claims.

Friday, September 26

• The Gfk think tank is to release a report on German consumer climate.
• The U.S. is to round up the week with revised data on gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health. The U.S. is also to release revised data on consumer sentiment.

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