The Forex Week Ahead

The Forex Week Ahead: Monday September 12th – September 16th

Tue: CNY – Industrial Production, Retail Sales, EUR – EZ ZEW Survey, German CPI, GBP – CPI,
Wed: JPY – Industrial Production, GBP Average Weekly Earnings, ILO Unemployment Rate,, NZD – GDP
Thu: EUR – EZ CPI, GBP – BOE Rate Decision, USD – Retail Sales, Industrial Production, Manufacturing Production
Fri: USD – CPI, UoM Confidence, Real Average Weekly Earnings


  • USD The US Dollar traded lower over the week after the August ISM Non-Manufacturing reading came in well below expectations at 51.4 vs 54.9.   The data came as a disappoint to US bulls who were encouraged by recent comments from Fed chair Yellen who noted that she felt recent data has been supportive of a rate hike this year. Data focus this week will be on Retail sales alongside Industrial & Manufacturing production.
  • EUR ECB left its key interest rates unchanged. Main refinancing rate, deposit rate and marginal lending rate held at 0.0%, – 0.4% and 0.25% respectively. The central bank also refrained from expanding its stimulus program, contrary to expectation that bond purchase may be extended beyond its current due date of March 2017. Growth forecast for this year was revised up to 1.7% (previous: 1.6%) but forecast for 2017 and 2018 was revised down to 1.6% (previous: 1.7%). No change to inflation forecast for 2016 and 2018, at 0.2% and 1.6% respectively, while inflation outlook for 2017 was revised down to 1.2% (previous: 1.3%). EuroZone and German inflation readings will be key European data focus this week.
  • GBP UK’s industrial production grew a meagre 0.1% MOM July (June: flat growth), underpinned by the slowest production in the manufacturing sector in a year but was alleviated by the jump in oil and gas output. Factories production fell 0.9% from June to July, extending the 0.2% MOM decline in June. Output rose 2.1% from a year ago, with manufacturing gaining 0.8%. Separately, house prices grew 6.9% YOY in the three months through August, its slowest pace since 2013. That followed price increase of 8.40% YOY in the three months through July. The BOE September rates meeting takes key focus this week, preceded by earnings and employment data.
  • JPY Japan’s coincident and leading index ticked up for two straight months in July, signalling that businesses were more optimistic about the economy. Coincident index climbed to 112.8 (June: 112.1) whilst leading index rose to 100.0 in July (June: 99.2). On a separate report, final reading of 2Q GDP showed that the Japan expanded 0.2% QOOQ last quarter, quicker than a previous estimate of no growth largely due to upward revision in private demand.
  • AUD RBA held interest rates unchanged at 1.5% as expected in yesterday’s meeting following two cuts in four months to spur sluggish inflation. The accompanying statement suggests that the central bank has more rooms for easing should economic conditions deteriorate or if further appreciation of the Australian dollar hinders exports and growth. Market shrugged off other economic data. Current account deficits rose from AUD 14.9 billion in the first quarter to. The Australian economy expanded 0.5% QOQ in 2Q which was half the pace of growth in the previous quarter. Steeper decline in capital investment (-0.7% vs -0.2%) coupled with slower pace of goods/services exports growth (+0.3% vs +0.7%) were dragging the headline number and strengthened the case for RBA’s preference of a weaker exchange rate to alleviate downside risks. While the economy grew 3.3% on an annual basis, the quickest pace since June 2012, risks remain tilted on the downside as indicated by disappointing indicators from the manufacturing, services and construction industries in August.
  • CAD – The Bank of Canada (BoC) maintained its target for the overnight rate at 0.5%, as was widely expected. In the accompanying statement, the Bank noted that whilst global growth in 1H16 was slower than projected in its July Monetary Policy Report, the Bank continues to expect it to strengthen gradually over the remainder of this year with global financial conditions having become even more accommodative since July.