FOREX Weekly Outlook

Through last week, both the Feds and the BoJ refused to create a near term guide for investors and traders as they painted a mixed picture in the wake of the market tensions. The Federal Reserve Bank last week kept rates unchanged at their September meeting but continue to say that a rate hike is very likely before the end of the year. The Bank maintained its confidence in US economic growth but preferred to delay its rate hike. Three members however opposed the statement. The rate raise will most likely happen at the Fed’s December 13 and 14 meeting. Policy members have also reduced their estimates for inflation and economic growth in 2016.

The BoJ have also made very little near term changes to the policy, but is now aiming towards long term interest rate in contrast to making full commitments to a specific QE target. In other news, the GBP was hammered by talks of a strong Brexit while the euro has kept to its range. The Aussie also recovered its losses against the Kiwi

Through this week, speeches will be made by Mario Draghi and Fed Chair Janet Yellen among others, we will see the US Durable goods orders, and Consumer Confidence as the GDP data from the US, Canada and the UK also holds major significance. Other Releases due this week are;

• Oil Producers Meeting

Representatives of OPEC and non-OPEC members are due to hold informal talks in Algeria on Wednesday, September 28th. The talks are due to take place on an informal basis on the fringes of the International Energy Forum (IEF) in Algiers. The IEF meeting will be held over three days from September 26-28th and there is the potential for either a change in the OPEC meeting or for additional meetings to be held.

Inevitably, there will also be private talks and further rumours ahead of the talks, which will trigger significant moves in oil prices. There will be a strong focus on the stance of Saudi Arabia and Iran given their strong rivalry both in terms of oil production and regional geo-politics. The stance of Iraq will also be very important for any deal to be reached, especially as it wants to increase production.

• ECB Draghi Testimony

ECB President, Mario Draghi will testify to the European Parliament on Monday September 26th at 10:00 EST. Following the Bank of Japan and Federal Reserve policy meetings, attention will tend to move back towards the ECB as it continues its battle with deflation.

There has been some tentative evidence that deflationary pressures have started to ease with a small increase in output prices in the latest Eurozone PMI data. The increase, however, falls well short of the gains needed to trigger a sustained increase in inflation and the ECB will be under pressure to deliver more stimulus. Draghi will inevitably have to tread extremely carefully given that he will need to garner Governing Council support for any new measures.

• US Durable Goods Orders

The latest US durable goods orders data will be released on Wednesday September 28th at 08:30 EST. To some extent, there is likely to be a sense of anti-climax following the Federal Reserve decision not to raise rates in September, with the assumption that there is no potential for a change until December.

The US data releases will, however, still need to be watched very closely given the overall importance for underlying confidence in the outlook. The Fed remains concerned over weak investment levels, although an important element has been weakness in the oil sector, which is now stabilising.

• UK Current Account

The UK current account data will be released on Friday September 30th at 04:30 EST. The UK current account deficit was an important focus during the first half of 2016, with widening quarterly deficits for the fourth quarter of 2015 and first quarter of 2016. Fears surrounding underlying balance of payments vulnerability increased, especially with the quarterly deficits at an annual rate above 7% of GDP.

Attention has inevitably shifted back towards growth conditions following the UK referendum vote to leave the EU, with the Bank of England easing monetary policy to support conditions. The overall current account position will, however, be even more important over the next few months as a whole. There should be an improvement in exports with Sterling weakness providing support, although import values are also likely to increase, which will limit trade improvement.

Some Other Major Events are;

• The German IFO Business Climate (Monday, 8:00.)


• BOC Governor Stephen Poloz Speech (Monday, 23:10)


• US CB Consumer Confidence (Tuesday, 14:00)


• US Crude Oil Inventories (Wednesday, 14:30)


• BoJ Governor Haruhiko Kuroda’s speech (Thursday, 6:35)