Weekly Outlook: Oct 17 – 21; The Week Ahead is Pretty Crowded with Economic Data

We have a heavy economic calendar in the week ahead with many policy meetings from the major banks and a plethora of macro-economic data coming out. The European Central Bank and Bank of Canada will have their interest rate decisions while the U.S., U.K., and Eurozone as a whole will publish their inflation reports for September. Additionally, many speeches from committee members are scheduled.

This week is starting with the release of Eurozone’s consumer price index for September which is forecasted to remain the same as the previous month at 0.4% annually.


The German Buba monthly report will be published, as well as, the U.S. industrial production which is expected to rise by 0.1% in September from a drop of 0.4% mom in the previous month. After that, we shift to U.K. where the CB leading economic index for September will be announced. A while later, the U.K. MPC member Broadbent, U.S. Fed’s Vice Chairman Stanley Fischer, ECB’s President Mario Draghi, as well as RBA Deputy Governor Lowe have scheduled press conferences. Overnight, the New Zealand’s consumer price index for Q3 is expected show that consumer prices grew 0.1% yoy versus a rise of 0.4% the last quarter. Later on, the RBA meeting minute’s will be published.

Tuesday is a CPI day! Both U.S. and U.K. will release their inflation reports. The U.K.’s headline inflation rate is expected to advance by 0.8% in September from 0.6% yoy in the month prior. Contrary, on a monthly basis, the market forecasted the consumer prices to have risen just 0.1% in September versus a slightly stronger increase of 0.3% the previous month. The producer price indexes for input and output are coming out as well. The U.K. retail price index is predicted to show a small improvement of 0.2% in September compared with the same month the year before, while it’s expected to its growth to weaken slightly to 0.1% versus August’s figure of 0.4%.


In the U.S., the consumer price index is estimated to jump 0.3% in September from 0.2% mom the previous month. The indicator will be cautiously watched as Fed Yellen signaled that December’s rate hike is data-dependent and inflation is one of the main headaches of U.S. economy. A better than expected figure could lift the dollar as if the figure meets the forecast, the headline inflation will record a five-month high.


The National Association of Home Builders (NAHB) will release the housing market index for October which is expected to slow down marginally at 63 from 65 before. In the midnight, Australian mid-year economic and fiscal outlook report will be published, as well as, the GDP growth of China for the third quarter.

Wednesday is starting with the U.K. employment report. The headline unemployment rate for the three months to August is estimated to remain unchanged at 4.9%, as well as the average earnings including the bonus at 2.3% for the same period. The claimant count change which is expected to rise 2.6K for September from 2.4K the previous month.
Going to U.S., the MBA mortgage applications and some indicators from the housing sector are coming out. The housing starts are estimated to rose 1.170M mom in September from an increase of 1.142M the previous month and building permits for September are expected to be up 1.155M mom from 1.152M the month prior. The Bank of Canada will have its policy meeting and will announce the interest rate decision. Its benchmark interest rate is 0.5% since July 2015 and no changes are expected in this policy meeting. The monetary and rate statements are scheduled to be published as well.

In the U.S., Fed’s Beige Book report will come out while overnight, in Australia, the employment report for September is planned to be published. The unemployment rate is expected to rise to 5.7% from 5.6% before while the employment change is expected to show that 15K people employed versus a decrease of 3.9K before.

Going to Thursday, the German producer price index for September is forecasted to grow 0.1% versus a drop of 0.1% mom in the month prior. In the Eurozone, the current account is scheduled to be published whilst later on, in the U.K., the retail sales are forecasted to rise by 4.8% yoy in September from 6.2% before. The focus of the day is the ECB interest rate decision. Both the interest rate and the deposit rate are expected to remain unchanged at 0.0% and -0.4%, respectively. The speech of ECB President Mario Draghi, a while later, will be closely watched in order to learn out if the central bank schedules to apply further easing measures.


In the U.S., the jobless claims for the week ended on October 15[SUP]th[/SUP] will be announced while the CB leading indicator is expected to incline by 0.2% mom in September from -0.2% the month prior. The existing home sales are also coming out, and are forecasted to be 5.38M in September versus 5.33M before.

On Friday, the economic calendar is quiet, especially when you compare it with the rest of the week. Canada’s retail sales are estimated to be up 0.2% mom in August versus a drop of 0.1% the month before. The consumer price index is expected to climb at 0.2% mom in September from a flat month in August. In the Euro area, the flash consumer confidence for October is expected to improve at -7.9 from -8.2 the month prior.

EUR/USD Technical Outlook
This week’s European Central Bank meeting on Thursday will be the real test for the euro which plunged more than 2% versus the U.S. dollar during last week’s session. The EUR/USD pair broke the descending triangle to the downside and almost challenged the 1.0950 support level.

The main currency is developing below the falling trend line which is holding over the last five months. The technical structure suggests further bearish movement, however, we could experience a pullback towards the 1.1000 – 1.1050 region. The three SMAs (50-SMA, 100-SMA and 200-SMA) have started to move south and the 50-SMA crossed below the 200-SMA. The technical indicators on the daily chart, are biased lower near the oversold areas. The RSI oscillator continues to follow a downward path while it is moving near the 30 level. The MACD indicator lies below its zero line and during the rally, crossed below its trigger line, confirming the downward momentum.


GBP/USD Technical Outlook
Sterling will be in focus this week due to the busy economic calendar. The GBP/USD pair plummeted more than 16% since May and recorded a fresh 31-year low at 1.1978 price level. On a monthly basis, the pair is creating the sixth red candle in a row, following the rebound on the 1.5020 resistance level.

From the technical point of view, over the last five days the pair is establishing and trading within a consolidation area roughly around the 1.2200 price level, whilst moving down to psychological support at 1.2100 and up to 1.2330 resistance level. Currently, the cable is moving near the 1.2160 region and if the bears are strong enough to push the price further down, we would expect extensions towards the 1.1978 barrier. A failure to broke the 1.2100 obstacle, if there is a successful penetration of the 1.2330 resistance level which overlaps with the 50-SMA on the 4-hour chart, then should prompt an upward move. Then, the pair will challenge the 1.2500 significant region. Technical indicators are following a bearish area with some weak momentum.


USD/CAD Technical Outlook
Next week the focus will return to Canada and its economy with the Bank of Canada rate decision on the calendar along with retail sales and consumer prices index. The USD/CAD is establishing within a rising channel over the last five months and made several attempts to break this pattern.

The pair challenged the 6-month fresh high at 1.3310 resistance level during last week’s session and had a pullback on that level. Currently, is trading slightly below the 1.3180 barrier, between the 200-SMA and 100-SMA on the 4-hour chart. The next initial targets are the 1.3100 psychological obstacle and the 1.3065 support level. An alternative scenario is a penetration of the 1.3180 region to the upside which will open the door for a retest of the 1.3310 strong level. Technical indicators are moving in a bearish area while both, MACD and RSI are flattening.