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Forex - Weekly Outlook: November 4 - 8

ForexNov 03, 2019 06:09AM ET
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© Reuters. - In what is set to be a quiet week on the economic calendar investors will be focusing their attention on appearances by host of Federal Reserve speakers. The Fed cut rates for a third time this year last week and indicated that they may now be planning a pause.

In the Eurozone, new ECB head Christine Lagarde will speak on Monday. Her comments will be closely watched at a time of deepening divisions between ECB policymakers over how best to respond to slowing growth in the bloc.

The Bank of England’s newly renamed Monetary Policy Report is out on Thursday. With monetary policy expected to remain on hold markets will be awaiting updated economic forecasts ahead of the looming general election amid ongoing Brexit uncertainty.

Trade developments will also continue to remain in the spotlight, amid persistent concerns over the effect of trade tensions on the global economic outlook.

The dollar was lower in late trade on Friday after data showed a mixed view on the economy, and as optimism that the U.S. and China will reach a deal to end their trade war reduced safe-haven demand for the greenback.

The dollar initially gained after U.S. jobs growth slowed less than expected in October, while wages gained and hiring in the prior two months was stronger than previously estimated.

The U.S. currency was unable to hold onto the gains, however, and was further dented after the Institute for Supply Management (ISM) said the manufacturing sector contracted for the third consecutive month in October.

The U.S. dollar index against a basket of six major currencies fell to 97.01, down 0.14% on the day. It earlier rose to 97.26 on the jobs data. For the week, the index was down 0.6%.

The dollar has weakened since the Fed on Wednesday cut interest rates for the third time this year, and indicated that further reductions may not be forthcoming.

Concerns about a slowing American economy is weighing on the greenback, however, with the U.S. central bank expected to resume rate cuts if the economic data worsens.

Fed Vice Chair Richard Clarida said on Friday that the rate cuts put into effect leave the U.S. economy better armed to withstand the risks of a global slowdown.

Safe-haven flows into the U.S. currency have also weakened on optimism that the U.S. and China are close to reaching a deal to end their trade war.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin made progress on a variety of issues during a telephone call on Friday with China’s Vice Premier Liu He about an interim trade agreement, USTR said in a statement on Friday.

The euro was 0.14% higher against the greenback late Friday, for a weekly gain of 0.8%. The British pound was little changed late Friday, but still ended the week 0.9% higher.

The dollar was higher against the yen in late trade, paring the week’s losses to 0.43%.

Ahead of the coming week, has compiled a list of significant events likely to affect the markets.

Monday, November 4

Japan - market holiday

Australia - Retail sales

Eurozone - Manufacturing PMI’s; Sentix Investor Confidence; ECB President Lagarde Speaks

U.K. - Construction PMI

U.S. - Factory orders; Fed Bank of San Francisco President Mary Daly speaks

Tuesday, November 5

China - Caixin Services PMI

RBA - Rate decision

U.K. - Services PMI

U.S. - Trade balance; ISM Non-Manufacturing PMI; Dallas Fed head Robert Kaplan and Minneapolis Fed President Neel Kashkari speak

Wednesday, November 6

New Zealand - Employment report

BOJ - Monetary policy meeting minutes

Eurozone - Service PMI’s; retail sales; German factory orders

U.S. - Chicago Fed chief Charles Evans, New York Fed head John Williams and Philadelphia Fed President Patrick Harker to speak

Thursday, November 7

Eurozone - German industrial production; European Commission economic forecasts

BOE interest rate decision

U.S. - Initial jobless claims; Dallas Fed head Robert Kaplan and Atlanta Fed chief Raphael Bostic to speak

Friday, November 8

RBA - Monetary Policy Statement

China - Trade balance

Canada - Employment report; building permits

U.S. - San Francisco Fed President Mary Daly speaks; Prelim UoM Consumer Sentiment and inflation expectations

--Reuters contributed to this report

Forex - Weekly Outlook: November 4 - 8

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