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Forex - Weekly outlook: November 2 - 6

Published 11/01/2015, 07:22 AM
© Reuters.  Dollar slips lower amid profit taking
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Investing.com - The dollar fell against the other major currencies on Friday as investors took profits in the wake of a rally after the Federal Reserve indicated that it could raise interest rates at its December meeting.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.38% to 96.99 in late trade to end the week 0.23% lower.

The dollar came under pressure after data on Friday showing that U.S. consumer spending ticked up just 0.1% in September, the smallest gain in eight months.

A separate report showed that a price index for consumer spending dipped 0.1%, the first drop since January.

The data tempered expectations for higher interest rates before the years end.

The yen had strengthened earlier in the session after the Bank of Japan’s decision to keep monetary policy unchanged.

The BoJ lowered its growth and inflation forecasts however, fueling expectations that it could ramp up its stimulus program next month.

USD/JPY fell to lows of 120.29 before pulling back to 120.61 in late trade. The euro was also weaker against the yen, with EUR/JPY touching lows of 132.26 before ending at 132.69.

The single currency was boosted by data showing that the euro zone emerged from deflation in in October.

Data on Friday showed that the euro zone consumer price index edged up to zero last month after falling 0.1% in September, but lower energy costs continued to weigh.

Another report showed that the euro area unemployment rate ticked down to 10.8% in September from 10.9% in August.

The data eased pressure on the European Central Bank to expend its monetary stimulus program.

Sterling also gained ground against the dollar, with GBP/USD advancing 0.76% to 1.5426 amid growing expectations that the Bank of England could hike interest rates earlier than had been expected.

The commodity linked Australian and New Zealand dollar were boosted by higher oil prices. AUD/USD was up 0.87% to 0.7135 late Friday, while NZD/USD gained 1.3% to end at 0.6780.

The kiwi received an additional boost after data showing that business confidence in New Zealand improved for a second straight month in October.

In the week ahead, investors will be looking ahead to Friday’s U.S. employment report, for indications on the strength of the economy.

Central bank announcements in the U.K. and Australia will also be in focus.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, November 2

Australia is to release data on building approvals.

China is to publish its Caixin manufacturing index.

Switzerland is to release data on retail sales.

The U.K. is to produce a report a manufacturing activity.

In the U.S., the Institute of Supply Management is to release data on manufacturing activity.

Tuesday, November 3

Markets in Japan are to remain closed for a national holiday.

The Reserve Bank of Australia is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.

In the euro zone, Spain is to release data on the change in the number of people unemployed.

The U.K. is to publish survey data on construction activity.

The U.S. is to release data on factory orders.

Wednesday, November 4

New Zealand is to publish its quarterly employment report.

Australia is to release data on retail sales and the trade balance.

China is to publish its Caixin services index.

ECB President Mario Draghi is to speak at an event in Frankfurt.

The U.K. is to publish survey data on service sector activity.

The U.S. is to publish the ADP report on private sector jobs creation.

Both the U.S. and Canada are to publish trade data and the ISM is to publish data on service sector activity in the U.S.

Fed Chair Janet Yellen is to testify on bank regulation before the House Financial Services Committee, in Washington.

Thursday, November 5

RBA Governor Glenn Stevens is to speak at an event in Melbourne.

The BoJ is to publish the minutes of its latest policy setting meeting.

Germany is to release data on factory orders.

The Bank of England is to announce its interest rate decision and publish the minutes of its monetary policy meeting. The bank is also to publish its quarterly inflation report.

The U.S. is to release data on initial jobless claims as well as preliminary data on labor costs.

Friday, November 6

The RBA is to publish its monetary policy statement.

The U.K. is to release data on manufacturing production and the trade balance.

Canada is to publish its monthly employment report and data on building permits.

The U.S. is to round up the week with the closely watched report on nonfarm payrolls.

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