Forex Weekly Outlook

On Monday we are likely to see trading volumes back at their previous highs, but the restored trading volumes trend will probably be met by a dearth of key events in the coming week. There is currently a high level of uncertainty surrounding the Federal Reserve and the Bank of Japan policy meetings which will be holding next week. With the current state of the market’s atmosphere, the chances of a very volatile trading week is quite high, especially if there is a continued lack of clarity surrounding Fed intentions.

Some of the Major Market Movers Scheduled to Drop this week include:

Bank of England Monetary Policy Meeting

Bank of England will announce its latest monetary policy decision on Thursday September 15th at 11.00 GMT. This is not a super Thursday and there is no inflation report. There will be the decision on interest rates and bond purchases, together with a summary of the meeting and the vote splits within the minutes. There is very little chance that there will be any change in interest rates at this meeting following August’s rate cut and expansion of bond purchases.

The meeting will still be very important for UK asset markets and expectations surrounding both the economy and monetary outlook. The bank will have received more information on the outlook and a major focus will be whether there is any shift in expectations towards cutting interest rates further.

US Consumer Prices

The US consumer prices data will be released on Friday September 16th at 08.30 EST. The Federal Reserve has a dual mandate of maximum employment and price stability. Although much of the recent focus has tended to be on the labor market, inflation trends are also vitally important for the Fed. The latest inflation data will, therefore, be watched very closely, especially as it is the last major data release ahead of the Fed meeting.

Last year, for August, there was a decline in headline consumer prices of 0.1% and a small 0.1% gain for core prices. There should, therefore be scope for an increase in annual rates in this data and any evidence of a sharper increase in prices within the services sector would add to pressure for higher interest rates.

US Retail Sales

The US retail sales data will be released on Friday September 15th at 08.30 EST. After two strong reports for May and June, the July retail sales data was disappointing with a miss on all three key metrics. Headline and control-group sales were unchanged for the month while there was a decline in underlying sales, although the June data was revised higher.

The Federal Reserve has been optimistic over consumer spending and there was an upward revision to 4.4% for the second-quarter personal consumption expenditure data. The Fed has seen evidence of an underlying slowdown in auto sales from unsustainable levels. To be confident in raising interest rates the FOMC will be looking for a solid overall tone in consumer spending and evidence that any retreat in the pace of auto sales is being offset by stronger spending elsewhere. A robust pace of spending would also suggest underlying consumer confidence in the labor market.

Other Releases for the week include;

• UK Average Earnings Index (09/14/2016 Wednesday 8:30 GMT)


• Germany Zew Economic Sentiment (09/13/2016 Tuesday 9:00 GMT)


• Speech by ECB President Draghi (09/13/2016 Tuesday 9:00 GMT)


• UK Claimant Count Change (09/14/2016 Wednesday 8:30 GMT)


• US Crude Oil Inventories (09/14/2016 Wednesday 14:30 GMT)


• New Zealand GDP (09/14/2016 Wednesday 18:45 GMT)