Major market moving events for 38th week of 2015

Author Haresh Menghani Category Fundamental Analysis 14 Sep 2015 Updated at 01:14 CET
Last week the US Dollar (USD) posted a weekly declines against most major currencies except against the Japanese Yen (JPY), which fell on the back of Japanese Prime Minister Shinzo Abe hinted towards additional stimulus measures by promising corporate tax cuts. Nevertheless, in the week preceding the Fed decision, the overall US Dollar Index (I.USDX) registered a loss of over 1.1%.
 
Last week’s USD weakness indicated declining expectations of the first Fed rate hike since 2006 at its upcoming meeting on Wednesday and Thursday, which happens to be the main event from this week's economic calendar. With BoJ and SNB also scheduled to announce their respective monetary policy decision, this week's move in the Forex market would be dominated by central bank and economic release that influences central bank's monetary policy decisions. Let's have a brief overview of some important market moving events of the week.

Central Banks in Focus
 
Amongst major central bank events, the Reserve Bank of Australia (RBA) is scheduled to release the minutes from its monetary policy meeting on Tuesday. The meeting would reveal the central bank's economic outlook amid the ongoing fears of economic slowdown in China, Australia's largest trading partner, which would eventually influence its decision to announce a further cut to its policy rates in the near-term.
 
The Bank of Japan (BOJ) is also scheduled to announce its monetary policy decision on Tuesday. This will be followed by a press conference where comments from Governor Kuroda will be closely scrutinized for evaluating central bank's readiness to introduce further stimulus measures. A no change to its current monetary policy stance is what expected from the central bank. BoJ is also scheduled to release the minutes of its monetary policy meeting held on August 7.
 
On Thursday, the Swiss National Bank (SNB) is scheduled to announce its target range for Libor. This would be accompanied by the central bank’s monetary policy assessment, which is used as a tool used by the central bank to communicate the possible outcome of its future monetary policy meetings. The central bank is expected to leave the current interest rate levels unchanged at -0.75%.
 
Moving on to the much-awaited event, outcome of the Federal Reserve's two-day monetary policy meeting, scheduled to be announced on Thursday where investors will get clarity on the Federal Reserve's stance on the first interest rate hike since 2006. The announcement will be accompanied with an update on FOMC's projection for inflation and economic growth over the next 2 years and will also be followed by a press conference by the Fed Chairwoman Janet Yellen. Even if the Fed refrains from raising interest rate this time, market players expect the Fed still remains on track to announce an interest rates hike in 2015. Hence, comments by the Fed Chairwoman Janet Yellen, during the press conference, will be closely looked to determine the timing of first rate-hike. However, should the Fed's once again lowers its interest rate projection, implying a possible push to the decision of raising interest rates to 2016, the market could witness some serious USD depreciation.

Other Important Economic Releases
 
With the US labour market already signalling signs of a strong recovery investors will now start watching the other aspect of the Fed's dual mandate of price stability. Ahead of the Fed announcement, investors will get an update on the latest read on US inflation from this week's CPI release for the month of August, scheduled on Wednesday. The report on consumer prices is expected to show CPI declining by 0.1% while core CPI (excluding food and energy) predicted to register a 0.1% rise on a month-on-month basis.
 
In other economic releases from the US, market participants will particularly focusing on retail sales data for the month of August, which is scheduled for release on Tuesday. Following a rebound in July, economists are expecting the data for the month of August to show a growth of 0.4% while core retail sales, which excludes automobile sales, is expected to remain muted and register a nominal growth of 0.1%.
 
From the US manufacturing sector, investors will confront the release of two regional manufacturing indices, namely - Empire State Manufacturing Index and Philly Fed Manufacturing Index, scheduled for release on Monday and Thursday respectively. Following an unexpected drop to -14.9 in August, the Empire State manufacturing index for September is expected to move back above 0.0 mark to 0.7, signalling improving conditions. Meanwhile, the Philly Fed manufacturing index is expected to retrace a bit to 6.1 in September after an unexpected rise to 8.3 in the month of August. Also watch out for industrial production data for the month of August, scheduled for release on Tuesday.
 
Investors this week will also get an update on the US housing sector as the Commerce Department is scheduled to release reports on building permits and housing starts for the month of August on Thursday. Continuing with the slow pace of recovery in US housing market, economists are expecting building permits for August to have grown to a seasonally adjusted annual rate of 1.15 million, while housing starts are expected to have slowed to a 1.16 million-units pace in August.
From UK, the key highlights from this week's economic calendar includes the release of UK inflation data, UK employment report and monthly retail sales data, scheduled for release on Tuesday, Wednesday and Thursday respectively. The latest print of the UK inflation data, which turned positive in July, is scheduled for release on Tuesday. For the month of August, economists are expecting UK inflation to flatten out once again and move back to 0.0%.
 
The UK labor market report, scheduled for release on Wednesday, is expected to show the number of people claiming for unemployment related benefits to decline by 5.1K and the unemployment rate is expected to hold steady at 5.6%. Meanwhile, consumer spending, which remains supportive pillar of UK's economic recovery, is scheduled for release on Thursday. Following a tepid growth of 0.2% in July, the indicator is expected to move a tick higher and show 0.2% growth for the month of August.
 
In addition to this, traders will also watch for some meaningful releases from other parts of the world. Few of the releases from the Euro-zone include, German ZEW economic sentiment on Tuesday and Euro-zone final CPI print on Wednesday. New Zealand's GDP growth rate for the second-quarter of 2015 is scheduled for release on Thursday.
 
Summing it all, the recent weakness in USD has been on the back of uncertainty over the Fed's first rate-hike decision in almost a decade. Any further descend in expectations of the Fed policy action in 2015 poses a serious risk of a knee-jerk reaction for the US Dollar.
 
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