Weekly Market Outlook

Weekly Market Outlook: Fed speech, RBA rate decision, and BoE statement! 

Weekly Market Outlook – After a week of unfavorable US data that weakened the dollar and raised doubts about the need for another Fed interest rate hike, the upcoming week will see a lighter US economic agenda. Attention will shift to the ISM non-manufacturing PMI. Meanwhile, the RBA and the BoC will announce their interest rate decisions, marking the beginning of crucial central bank meetings that could influence major currency pairs in the near future!

What to watch on the Economic Calendar this week:  

* - Important

Monday, September 04:

  • NZD: Overseas Trade Index q/q 

  • AUD: MI Inflation Gauge m/m EUR: German Trade Balance 

  • CHF: GDP q/q* 

  • CAD: Bank Holiday 

  • USD: Bank Holiday 

  • EUR: German Buba President Nagel Speaks 

  • EUR: ECB President Lagarde Speaks* 

Tuesday, September 05:

  • GBP: BRC Retail Sales Monitor y/y
  • JPY: Household Spending y/y 
  • NZD: ANZ Commodity Prices m/m
  • CNY: Caixin Services PMI*
  • AUD: Cash Rate* 
  • AUD: RBA Rate Statement* 
  • EUR: Final Services PMI* 
  • GBP: Final Services PMI* 
  • EUR: PPI m/m 
  • USD: IBD/TIPP Economic Optimism 
  • NZD: GDT Price Index

Wednesday, September 06:

  • AUD: GDP q/q* 
  • GBP: Construction PMI 
  • EUR: Retail Sales m/m 
  • CAD: Trade Balance 
  • USD: Trade Balance 
  • GBP: Monetary Policy Report Hearings* 
  • USD: Final Services PMI*
  • CAD: BOC Rate Statement* 
  • CAD: Overnight Rate* 
  • USD: ISM Services PMI* 

Thursday, September 07:

  • USD: FOMC Member Logan Speaks 
  • NZD: Manufacturing Sales q/q 
  • AUD: Trade Balance CNY: Trade Balance 
  • CNY: USD-Denominated Trade Balance 
  • AUD: RBA Gov Lowe Speaks* 
  • JPY: Leading Indicators 
  • CHF: Unemployment Rate 
  • CHF: Foreign Currency Reserves* 
  • EUR: Final Employment Change q/q 
  • EUR: Revised GDP q/q 
  • USD: Unemployment Claims* 
  • CAD: Ivey PMI* 
  • USD: FOMC Member Harker Speaks* 
  • USD: Crude Oil Inventories 
  • USD: FOMC Member Goolsbee Speaks 
  • CAD: BOC Gov Macklem Speaks* 

Friday, September 08:
  • USD: FOMC Member Williams Speaks 
  • USD: FOMC Member Bowman Speaks 
  • USD: FOMC Member Logan Speaks 
  • JPY: Average Cash Earnings y/y 
  • JPY: Final GDP Price Index y/y 
  • JPY: Final GDP q/q 
  • JPY: Economy Watchers Sentiment 
  • EUR: EU Economic Forecasts 
  • CAD: Employment Change 
  • CAD: Unemployment Rate 
  • USD: FOMC Member Barr Speaks 
  • USD: Final Wholesale Inventories m/m 

Saturday, September 09:

  • CNY: CPI y/y* 
  • CNY: PPI y/y* 
  • ALL: G20 Meetings* 

By keeping an eye on the Global Economic Calendar, you will not miss any important updates, upcoming events, important announcements, or important data releases.
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Economic data highlights scheduled for September 4 week:

The week of September 4th kicks off with Labor Day on Monday, which means the stock and bond markets will be closed. It’s a light data calendar, giving us plenty of time to reflect on August’s employment report released on September 1st, and anxiously await the inflation data this week. All eyes are on the next round of economic data and how it could influence the FOMC decision at the September 19-20 meeting. The highlight of the week is likely to be the Fed’s Beige Book, which will be released on Wednesday at 2 PM ET.

This report compiles anecdotal evidence about conditions across the 12 Fed districts from early to late August. In the last Beige Book released on July 12th, only 5 districts reported modest growth.  However, it was an improvement over the prior two reports and suggests some upward momentum for economic growth as inflationary pressures ease and labor supply/demand imbalances improve. Fed policymakers, especially those who aren’t economists, pay attention to the tone of the Beige Book to guide their decisions. It provides a current overall picture of the economy and signals any shifts in activity.

This week is the final chance for Fed policymakers to share their thoughts on monetary policy direction before the communication blackout period takes effect at midnight on Saturday, September 9th. It will continue until midnight on Thursday, September 21st.  

United States/USD: Focus on the ISM non-manufacturing PMIs 

The US dollar retreated as recent US data prompted investors to reassess the likelihood of another Fed rate hike and anticipate more rate cuts next year. Job openings hit a low in July, consumer sentiment deteriorated in August, and the ADP employment report showed fewer-than-expected job additions. Investors now have mixed views on a November rate hike. 

The upcoming week will have light US data, but the ISM non-manufacturing PMI on Wednesday could impact Fed expectations. The S&P Global manufacturing and services PMIs fell in August, increasing downside risks for the ISM index. If new orders and prices decline as well, the dollar and Treasury yields may remain under pressure while equities could rise on expectations of lower interest rates fueling high-growth firms.

Eurozone/ EUR: Tier-three events dominate the schedule. 

In the upcoming week, we’ve got a bunch of releases lined up, but it looks like the tier-three events will be taking center stage. We’re talking about things like final inflation, GDP, PMIs, regional retail sales figures, surveys, and trade figures – they’re going to make up most of the upcoming reports. Now, these events aren’t exactly insignificant, but they usually don’t have a big impact on the market unless the PMI and CPI reports go through some major revisions.
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The highlight of the week, though, will probably be the speeches from a few ECB policymakers, including Christine Lagarde, Fabio Panetta, Philip Lane, and Isabel Schnabel. Exciting times ahead!  

United Kingdom/GBP: MPC Insights Awaited! 

Looking ahead to the coming week, there isn’t much happening on the data front. However, it’s worth keeping an eye on the Monetary Policy Report Hearing in front of the Treasury Select Committee on Wednesday. While the committee members are usually well-prepared by that stage, the questioning can be intense and offers a valuable opportunity to gain deeper insights into the MPC’s stance on interest rates.  

Canada/CAD: BoC holds steady, eyes on Guidance and Jobs data! 

This week, the Loonie will enter the limelight as the Bank of Canada holds its interest rate decision. In July, they raised rates by 25bps but didn’t provide clear guidance on future moves. Inflation data for June showed a slowdown, but July numbers indicated some stickiness.  Market participants see a 20% chance of action this week and a 50% probability of another hike by December. With Canada’s core rate closer to the 2% target and the flexibility range set at 1-3%, officials may choose to remain on the sidelines and assess the impact of past hikes on prices.  

Australia/AUD: RBA Decision and Economic Data Ahead 

The RBA monetary policy decision, crucial for markets, will be released on Tuesday. Consensus expects no change in the policy cash rate, staying at 4.1%, as the latest monthly CPI indicator shows a slower increase, now at 4.9% y/y compared to 5.4% y/y previously. Notably, ASX 30-day interbank cash rate futures imply a 14% chance of a 25-basis point cut on the cash rate to 3.85% for the upcoming RBA meeting on Tuesday, up from 12% a week ago. 

On Wednesday, Q2 GDP growth data is expected, with consensus at 1.7% y/y, lower than the 2.3% y/y growth in Q1. To end the week, the July balance of trade data will be released on Thursday, with consensus expecting a narrower trade surplus of A$10.5 billion, down from the three-month high of A$11.32 billion in June.  

China/CNY: Two key data to focus on for the upcoming week 

China’s services sector has shown resilience, with the August Caixin Services PMI expected to remain at 54, indicating expansion for the eighth consecutive month. Trade data for August suggests a slower decline in export growth and a further contraction in imports.  Recent economic indicators point towards stabilization and improvement, with the NBS manufacturing PMI for August surpassing expectations.
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New orders and production within the manufacturing sector have also shown expansion. The Caixin manufacturing PMI for August indicates a move back into expansion, reflecting the positive effects of fiscal stimulus measures on China’s economy.  

Japan/JPY: Q2 GDP Surpasses Expectations with 6% Growth 

The upcoming week appears to be relatively calm, with two key economic announcements. On Thursday, we will receive the preliminary leading economic index report, followed by the finalized Q2 GDP release on Friday.  The preliminary figure indicates a remarkable annualized growth rate of 6%, surpassing both the previous Q1 GDP of 3.7% and consensus expectations of 3.1%. This impressive increase represents the sharpest pace since Q4 2020 and marks the third consecutive quarter of robust economic expansion.  

Switzerland/CHF: Probability of interest rate hike 

Switzerland had another uneventful week, marked by quiet economic data releases. On Monday, GDP figures are anticipated to show a modest 0.1% quarterly growth, while the unemployment data on Thursday is projected to remain unchanged. These upcoming reports are unlikely to significantly influence the Swiss National Bank’s decision-making process at its next meeting on 21st September.  Currently, market sentiment leans towards no policy change, with a 30% probability of a 25-basis point interest rate hike.  

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This strategy is commonly used in financial markets, where traders speculate on price movements ahead of announcements. While it carries risks since rumors may differ from reality, skilled traders can use this approach to gain an advantage by anticipating future events. Financial derivatives like CFDs enable traders to capitalize on rising or falling markets by embracing the rumor and taking positions accordingly. 

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