After last week’s lack of fundamentals and full of central banks events, another week comes with many economic releases and events, which likely to have a notable impact on the markets.
However, traders are advised to follow the political news, as the recent geopolitical tensions have been the main driver of the market, more than the economic releases.
Gaps At The Open
At the opening of the Asian session, most of the asset classes opened on trading gaps, despite the fact that there were no significant events over the weekend, except the fears from Irma Hurricane impact, especially in the US.
Yet, the good news was that the storm has been downgraded to level 4 down from 5, which means that the aftermath might be lower than expected.
However, Irma is likely have a notable impact on both insurance companies and the US economy. Fitch also noted that the credit rating of the insurance sector will be affected, and some companies might have a hard time to recover from the current event.
But it looks like the market is not worried so far, and this is the main reason behind the trading gaps earlier in Asia, which likely to be covered later this week.
Economic Releases Ahead
The first trading day of this week comes with significant economic releases, whether in Asia, Europe and the US. However, volatility is likely to pick up further, as geopolitical tensions continues.
Tuesday, Traders need to keep an eye on the UK, as we will be waiting for the inflation figures for the month of August. The estimates points to 2.8% up from 2.6%, which would be the first increase in two months and the highest reading in three months, which also matches the highest level since 2013.
On Wednesday, the focus will stay toward the UK as we will be watching the Jobs Report for the month of August. Estimates are slightly positive, including 4.4% Unemployment Rate, -4K Claimant Count Change. However, the Average Earnings Index is what matters the most, the estimates also points to 2.3% compared to 2.1%, which would be the second increase in two months. One we have not seen since February.
Thursday, it starts in Asia with Australia’s Jobs Report and China’s Industrial Production, Retail Sales and Fixed Asset Investment.
In Europe, its all about Central Banks, including the Swiss National Bank which likely to keep the current policy unchanged, while the Bank of England will release its decision in addition to the MPC Meeting Minutes (Rate & Asset Purchases Votes) which matters the most.
Traders need to concentrate on how many members will be voting in favor for a rate hike, which will have a major impact on GBP pairs if 3 members votes in favor to raise the rates.
During the US Session, Eyes will be on the US inflation data, which likely to have a notable impact on the markets, especially if it comes with another surprise lower. Estimates are 0.3% for CPI and 0.2% for Core CPI
Finally of Friday, its all about the US once again, as we wait for Retail Sales, Core Retail Sales, Empire State Manufacturing Index, Capacity Utilization Rate and the Industrial Production.
USD Bearish Outlook Is Here To Stay
The US Dollar Index made another interesting close last week, which deepens its bearish outlook, with no signs of a short term retracement as of yet.
The Index managed to close the week below 91.50 for the first time since December of 2014, completing five days of consecutive declines, one we have not seen since August of last year.
In the meantime, from a technical point of view, any upside retracement is likely to be limited below 91.80’s and/or 92.60’s.
On the downside view, and after last week’s close, we will be looking for another leg lower, probably towards 90 followed by 89.50’s as there is no solid supports from the current levels.
Edited by:
Nour Eldeen Al-Hammoury
Market Analyst
