GBP, EUR & USD In Spotlight

Oct 15 – 19: Forex Week Ahead – FOMC, CPI & GDP Figures On The Cards!

Posted Saturday, October 13, 2018 by
Arslan Butt • 4 min read

It was a slow week as the markets exhibited thin volatility in the absence of major economic events. The Greenback struggled near a two-week low of $94.50 on Thursday against a basket of currencies as investors diminished their Greenback holdings on lower US Treasury yields and a weaker-than-forecast rise in domestic consumer prices in September.
Most of the traders felt hesitant to get in swing trades due to uncertainty about the US economic outlook. Here’s what to expect from them…

Watchlist – Top Economic Events This Week

Monday – Oct 15

USD – Retail Sales m/m
The Census Bureau is due to release the retail sales data at 12:30 (GMT). It’s the primary gauge of consumer spending which accounts for the majority of overall economic activity. Economists look very optimistic about the retail sales as the figures are expected to jump by 0.7% vs. 0.1% beforehand. Considering this, investors are likely to continue trading the dollar with a bullish sentiment.

USD – Core Retail Sales m/m
This also shows a change in the total value of sales at the retail level, but excluding automobiles. The data is due at 12:30 (GMT) and the retail sales are expected to grow by 0.4% vs. 0.3% beforehand.

NZD – CPI q/q
The Statistics New Zealand is due to release New Zealand’s inflation figures at 21:45 (GMT) with a positive forecast of 0.7%. Prices increased by only 0.4% QoQ in Q2 which is why the New Zealand dollar is likely to remain supported on Monday.

Tuesday – Oct 16

AUD – Monetary Policy Meeting Minutes
The Reserve Bank of Australia is due to release the Monetary Policy Meeting Minutes at 12:30 (GMT). It’s a detailed record of the RBA Reserve Bank Board’s most recent meeting, providing in-depth insights into the economic conditions that influenced their decision on where to set interest rates.

GBP – Average Earnings Index 3m/y
It’s a leading indicator of consumer inflation and shows a change in price for businesses and the government pay for labor, including bonuses. Simply put, when businesses pay more for labor, the higher costs are usually passed on to the consumer which leads to inflation.
The UK’s Office for National Statistics reported 2.6% average earnings in August, whereas, economists are expecting a neutral figure of 2.6% this month.

GBP – Unemployment Report
Fellas, it’s one of the most eyed economic data as it shows a change in the number of people claiming unemployment-related benefits during the previous month.
The Claimant Count Change for August revealed an extension of 8.7K. The fresh figure for September is forecasted to show a more moderate rise of 4.5K. A higher rise in jobless claims could be worrying.

The unemployment rate is expected to remain unchanged at 4%. The higher figure points slacks in the labor market and it will urge BOE to keep the rates unchanged to 0.50%.

Wednesday – Oct 17

GBP – CPI y/y
UK’s Consumer Price Index grew by 2.7% in August, dispensing growing inflationary pressures and helping justify the Bank of England’s interest rate hike for that month.
A slower CPI data of 2.6% is on the cards for September. The Retail Sales are projected to dip by -0.3%, which supports the expected drop in the inflation rate. Weaker inflation figure is considered bearish for the Sterling.

USD – FOMC Meeting Minutes
The dollar is bullish after the fact that the Federal Reserve boosted interest rates in September and indicated four further until the end of 2019.
Today at 18:00 (GMT), the meeting minutes from the event will shed light on some major topics, such as how FOMC members interpret the trade war and the consequences of a trade war on the US economy.

Should Fed change its monetary policy? Well, it’s just my opinion about the current FOMC meeting minutes and I’m also expecting a neutral response of investors on its release.

Thursday- Oct 18

AUD – Employment Change & Unemployment Rate
The Australian Bureau of Statistics will be eyed for the labor market figures at 00:30 (GMT). The Australian economy saw an impressive increase of 44K new jobs in August, significantly above expectations. The Australian labor market is doing well despite some issues in the housing sector and worries about China.
This month’s forecast is a bit shaky as economists are expected just 15.2K new jobs. The unemployment rate is also expected to remain on hold at 5.3%. So, we can expect a bearish tone in the Aussie throughout Thursday.

GBP – Retail Sales m/m
The Office for National Statistics is due to release the retail sales data at 8:30 (GMT). It’s the primary gauge of consumer spending, which accounts for the majority of overall economic activity. In August, the retail sales jumped by 0.3% vs. the forecast of -0.2%.
This month, economists are expecting a drop of -0.3% in retail sales. A negative number of sales indicate a slower inflation and slacks in the economy. Therefore, the Sterling bulls can face challenges on Thursday.

Friday- Oct 19

CNY – GDP q/y
At 2:00 (GMT), the National Bureau of Statistics of China will release the gross domestic product which is forecast to be 6.6% vs. 6.7% in the month of Sep. A drop in GDP isn’t coming as a surprise as the world’s second-largest economy is in a trade war with the United States. Investors are in fear that the tariffs may have caused and may cause more severe disruptions, impacting the whole world.

CNY – Industrial Production y/y
It’s a change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities. The figure is releasing along with Chinese GDP and due to the high importance of the GDP data, investors usually ignore the effect of industrial production unless there’s a huge divergence between expected and actual release. Economists are expected a slight drop of 0.1% this month.
CAD – Core Retail Sales m/m
The figure shows a change in the total value of sales at the retail level, excluding automobiles. A higher number of retail sales signals a growth in the economy. The Statistics Canada is due to release the figure at 12:30 (GMT). Canadian retail sales surprised the market with a 0.9% jump in September. Let’s see how it performs this month to determine further trends in the Loonie.

CAD – CPI m/m
The Canadian inflation is also suffering lately despite improved crude oil prices. In the month of September, the CPI figure came out at -0.1%, beating down August’s gains of 0.5%. It eventually places pressure on the BOC (Bank of Canada) to keep the interest rates on hold.

Summing up – I’m very thrilled to capture the maximum opportunities this week because, as you can see, the economic docket has so much to offer us. Are you ready for it?

So stay tuned to FX Leaders for potential trade ideas and forex trading signals. Enjoy your weekend!

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About the author

Arslan Butt is our Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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