Last week three large Central banks (BOJ, US Fed and RBNZ) took their interest rate decisions. All three banks left the rates unchanged. On Wednesday, Janet Yellen governor of the US Fed said that the Fed that there are strong grounds for the rate hike; however, the bank decided to wait for the new evidence of progress in achieving its targets said at a press conference. The USD index WSJ, which shows the positions of the USD against a basket of 16 major currencies, has lost 0.7% last week.
This is the last week of September. As a rule, on the last trading day or last trading week traders adjust their trading positions and build a new strategy for the next period.
Investors' attention this week will be focused on the debates between the candidates for U.S. President Donald Trump, Republican party and Hillary Clinton, Democratic party. And at the beginning of the week several key figures of the world's largest Central Banks will give speeches (the Bank of Japan, ECB, SNB, Canada and the US Fed).
This week news and statistics are as follows:
11:00 (GMT+3) – IFO index of business optimism and economic expectations in Germany for September;
12:30 – speech by Thomas Jordan, governor of the SNB. Volatility In the CHF will increase during his speech. Traders expect that he will indicate future plans for monetary policy of the SNB. The Central Bank adheres to the soft monetary policy in the country and believes that the national currency is overvalued. The Bank reserves the right to intervene into the currency market, if the rate rises too sharply. The SNB never notifies about interventions. Recently, the franc has largely lost the status of safe haven currency due to the threats of interventions, which prevents sharp rise in the franc;
17:00 – sales of new homes in the USA for August. This index is an important indicator of the state of the US housing market;
17:30 – index of business activity in industrial sector in September by Dallas Fed;
18:05 - speech of the ECB President, Mario Draghi. Usually his speeches after meetings of the ECB on monetary policy increase volatility in the financial markets; others cause less volatility. Nevertheless, in any case, traders need to be very careful, particularly in trades with the Euro and the European indices during the speech of M. Draghi, who is famous for making comments, which can change movement direction in the financial markets;
18:45 – speech of the representative of the US Fed Mr Tarullo;
19:00 – speech of the member of the governing Council of the ECB Mr Nowotna.
02:00 – speech by the Governor of the Bank of Canada, Stephen Poloz;
02:50 – a meeting of the Monetary Policy Committee of Bank of Japan. The Committee will analyze economic growth in Japan and specify future prospects of the financial policy of the Bank of Japan. The hawkish position the meeting will be a positive factor for the JPY;
16:45 – Preliminary index of business activity in the service sector and the composite index of business activity in the USA for September. A month ago the index was at the level of 51; the rise in the index above 50 is a positive factor for the USD;
17:00 – US consumer confidence index for September (forecast is 99.8 against 101.1 in August), which can have a negative impact on the USD;
23:30 – report of the American Petroleum Institute (API) on changes to oil reserves in the USS for last week.
03:20 – speech by RBA Deputy Governor.
09:00 - GfK consumer climate index in Germany for October. The index is a leading indicator, assessing consumer confidence to economic growth in the country. A month ago the index was at the level of 10.2;
09:00 – consumption index UBS in Switzerland for August. This indicator incorporates components: sales of new cars, activity level in the retail sector, number of nights booked in hotels of Switzerland, level of consumer confidence and the volume of credit card transactions;
15:30 – Orders for durable goods in the USA for August. In case of the positive index the USD will grow. It is expected that the index will be at the level of -1.5% vs +4.4% in July, which will have a negative impact on the USD;
16:30 –speech by ECB President Mario Draghi. Traders of the Euro and European indices shall be extremely;
17:00 – speech of the head of the US Fed Janet Yellen. Mrs Yellen’s speech can increase volatility in the foreign exchange market;
17:10 – speech by the head of the Fed St. Louis Mr James Bullard. Comments by Mr Bullard may affect the USD in the short-term;
17:30 - Weekly report of the US Department of Energy on stocks of oil and oil products in US stores;
20:30 – speech by Charles Evans, Chicago Fed governor and a member of FOMC;
23:35 – speech by Loretta's Maester Fed Cleveland governor.
02:15 - speech by Esther George, Fed Kansas city governor. Esther George is a supporter of the interest rate increase. Her speech can be a favourable factor for the USD;
02:50 – retail sales in Japan in August; consumer spending is an important indicator of the state of the Japanese economy. If the index is positive, the JPY will grow;
09:35 – speech by Haruhiko Kuroda, Bank of Japan Governor. Mr Kuroda will speak about the current economic situation in Japan, and will shed light on future prospects of the Central Bank. Despite the efforts of the Bank to stimulate Japanese economy, inflation is still low, production and consumption are falling, while the Yen is growing, which adversely affects Japanese manufacturers, focused on exports. Earlier Kuroda has repeatedly stated that the Bank to is prepared to introduce drastic measures if necessary. Market is usually actively reacts to the speeches by Kuroda. It is possible that volatility will increase not only in the Yen, but in general in the Asian and other financial markets;
10:55 – unemployment rate in Germany; it is expected that the index will remain unchanged at the level of 6.1%;
11:30 – volume of consumer lending in the UK in August.
15:00 – Preliminary Consumer price index (the CPI) in Germany for September. This index is the key indicator of inflation in the country;
15:30 – number of initial applications for unemployment benefits in the US for last week. Previous value was at the level of 252 000;
15:30 – US GDP price index for Q2; annual US GDP in Q2. The data on GDP along with labor market and inflation data has strong influence on the monetary policy decisions by the Fed. The forecast for GDP in Q2 is + 1.2%;
15:30 – US trade balance for August; price index and personal consumption expenditures in Q1; speech by Dennis Lockhart, representative of Fed Atlanta. Mr Lockhart usually supports monetary tightening in the US, which has a positive impact on the USD;
17:00 - speech by Jerome Powell, a member of the FOMC. This speech may have a short-term impact on the USD. Hawkish positions of the Fed’s representatives strengthen the USD, while more cautious position has a negative impact on the USD;
23:00 – speech by the head of the US Fed Janet Yellen. If Janet Yellen drops hints at possibility of the interest rate increase before the end of the year, the USD will rise in the market.
02:05 – British consumer price index for September;
02:30 – Japanese macro-economic statistics for August/September including consumer price index, unemployment rate, household spending;
02:50 – Reports of the Bank of Japan including forecasts for inflation and economic growth in the country and industrial output in Japan in August. This index is a leading indicator in the manufacturing sector of Japanese economy. It is expected that the index will be at the level of + 0.5%;
04:00 – China Caixin manufacturing Purchasing Managers’ from Markit Economics for September. This is a leading indicator of the state of the manufacturing sector in China; along with the business activity index (PMI) from CFLP, it has a strong impact on the global financial market. 04:45 - Caixin index of business activity in Chinese service sector (PMI) for August. Chinese economy is the second largest in the world after the US. Therefore, publication of important macro-economic indicators from this country has a significant impact on the global financial markets and on the Yuan and other Asian currencies, USD and Chinese and Asian stock indices;
11:30 – British GDP for Q2. GDP is an indicator of the general state of the British economy. Forecast + 0.6%;
12:00 – European annual consumer price index (preliminary release) for September; unemployment rate in August (forecast is 10.0%). Consumer price index is the key indicator of inflation, influencing on the decisions of the ECB to tighten or soft monetary policy. Eurozone faces a threat of deflation. According to the forecast the index will grow by 0.4%. If the forecast proves to be wrong, volatility in the euro and on European stock indices will increase;
15:30 – US personal income/expenses and personal consumption spending for September. The indices are important indicators of inflation in the United States;
16:45 - Chicago business activity index for September, which shows economic activity in the states of Illinois, Indiana and Michigan. If the index exceeds 5, it will be a positive factor for the USD;
20:00 – Report of the oilfield services company Baker Hughes on the number of active drilling rigs in the USA, which is an important indicator of the activity in the oil sector of the American economy, significantly affecting oil prices. Currently, the number of active rigs is 418.