Forex Weekly Outlook

The US dollar was looking for a new direction and it had a mixed week. The last full week of August features US housing data, durable goods orders and perhaps most importantly, the Jackson Hole Symposium. Here are the highlights for the upcoming week.

The US dollar suffered from Trump’s troubles, which affect things that markets care about: infrastructure spending and the position of Gary Cohn, a candidate for Fed Chair. The relatively dovish meeting minutes do not help.  On the other hand, the all-important retail sales report beat expectations. In Japan, GDP grew more than expected, but the currency dropped with tensions about North Korea. The ECB doesn’t like the strong euro, which initially dropped, but recovered. The pound received mostly positive data from wages and retail sales, but still struggled as inflation missed expectations. The Australian jobs market looks good, supporting the Aussie.

EUR/USD was pressured and slipped lower, but did not go far. Will it stay in range?. The upcoming week features Pthe PMIs, key German surveys and Draghi’s highly anticipated speech in Jackson Hole. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.

German GDP slightly missed expectations but this did not affect the euro-zone growth rate which remained at 0.6% in Q2. The ECB minutes expressed concern over the strong euro. EUR/USD dipped, but it was only temporary The terror attack on Barcelona did not seem to affect the common currency. The US dollar made another attempt to recover early in the week, but the trouble in the White House and the somewhat dovish meeting minutes weighed on the greenback. Economic data has been mixed, with weak housing data but a robust retail sales report.

USD/JPY initially had a positive start to the week as tensions around North Korea eased and the greenback attempted to make a comeback. However, the terror attack in Barcelona, as well as the Trump troubles, triggered a risk-off sentiment that helped the yen.

The most important data point coming out of the US, retail sales, beat expectations. That was much needed for the US dollar. However, the Fed’s meeting minutes seemed to show hesitation.

With a fading out of tensions with North Korea, the yen lost support. Nothing has materially changed around the rogue nation, but the focus of the US President has moved elsewhere. Yet Trump’s failure to fully denounce the terror in Charlottesville triggered the disbanding of two economic councils and rumours that Gary Cohn would quit. This hurt the dollar.

And while the tensions around North Korea faded, the horrific terror attack in Barcelona dampened the mood. And a damper mood helps the safe-haven yen.

In Japan, we learned that the economy grew at a whopping rate of 1% q/q. However, it was not enough for the yen. Once again, we have seen how the yen ignores the data and moves by the ebb and flow of risk.

Jackson Hole and a few other events

The big event of the week happens on Friday and Saturday, with the Jackson Hole Symposium. Central bankers descend on the resort in Wyoming and the speech by Janet Yellen is closely watched. Will she provide further hints about rate hikes? Also, watch out for housing data and durables goods orders.

GBP/USD remained pressured once gain even though some data points were OK. The upcoming week features the second read of GDP among other events. Here are the key events and an updated technical analysis for GBP/USD.

UK inflation data missed expectations, pushing back any potential rate hike in the UK. On the other hand, there were encouraging signs from the wage data and also retail sales. Fresh USD strength weighed on the pound early in the week. However, a risk-off sentiment and worries about delays in Brexit negotiations weighed on the pound. In the US, politics and the Fed minutes hurt the dollar, while retail sales supported it. Nevertheless, it seems that Brexit hurts more than Trump.

USD/CAD drifted to new highs but eventually dropped. Is the big correction over? The upcoming week features retail sales among other events. Here are the highlights and an updated technical analysis for USD/CAD.

Falling oil prices weighed on the Canadian dollar early in the week. In Canada, both foreign securities purchases and manufacturing sales missed expectations and this slightly weighed on the loonie. Oil prices also slipped but remained at the higher part of the $40-$50 range on WTI. In the US, the dollar suffered from the relatively dovish meeting minutes and Trump’s troubles. However, the most important US data point was quite good: retail sales beat expectations.

The Australian dollar had an interesting week, getting a boost from the jobs report. Can it attack 0.80? The upcoming week is quite light in terms of indicators. Here are the highlights of the week and an updated technical analysis for AUD/USD.

Australia enjoyed an impressive gain of over 27,00 jobs in July, and the report was accompanied by an upwards revision to June. That certainly helped the Aussie. China, Australia’s No. 1 trading partner, released some disappointing figures. Industrial output advanced by only 6.4% y/y against 7.1% expected. Fixed investment and retail sales also fell short of expectations. In the US, the dollar suffered from the somewhat dovish Fed minutes, mixed economic data and the mess in the White House. However, not all is bad in America: the retail sales report was excellent.