Next Week’s FX Forecast & Events Nov 04, 2019

US

The ISM non-manufacturing data will be released on Tuesday and will be important for sentiment towards the economy as a whole. Most stresses have been felt in the manufacturing sector and any evidence of weakness in the services sector would undermine wider confidence. In contrast, signs of strong growth would provide overall reassurance.

Comments from Federal Reserve speakers will continue to be watched closely during the week as markets consider whether interest rates will be cut again this year.

Political developments will be significant with markets monitoring House of Representatives hearings on possible impeachment against President Trump.

These domestic events will be important, especially given the potential impact on US-China trade talks.

US-China trade talks will be important for global risk appetite. Progress towards signing a deal would support commodity currencies.

UK

The Bank of England will announce its latest interest rate decision on Thursday with benchmark rates again expected to remain at 0.75%.

The bank will also release its latest inflation report with growth forecasts liable to be downgraded. Commentary on the outlook for interest rates will still be stifled by political uncertainty with the lack of Brexit resolution amplified by a General Election campaign.  

The services PMI data will also be monitored closely on Tuesday for evidence on underlying conditions within the economy.

Political developments will continue to be watched closely during the week as the election campaign continues and most attention will focus on opinion polls. Sterling will tend to gain some support if there is evidence of a strong performance by the Conservative Party on the assumption that this would lead to approval of the Brexit deal. Evidence of gains for the Labour Party would tend to weaken Sterling, especially with unease over their economic policies.

Euro-zone

The latest German factory orders and industrial production data on Wednesday and Thursday respectively will have an impact on sentiment. Another downturn would trigger fresh concerns over the Euro-zone economic outlook.

Comments from new ECB President Lagarde will be watched closely, especially if there is a focus on fiscal policy.  

International

The Reserve Bank of Australia will announce its latest interest rate decision on Tuesday with interest rates expected to hold at 0.75%. Forward guidance on the outlook will again be crucial for the Australian currency. Some reassurance would underpin the Australian currency.

New Zealand’s quarterly employment report is scheduled for Wednesday local time and will have a significant impact on sentiment towards the economy. Unemployment is expected to increase to 4.1% from 3.9%.

Canada will release the latest trade data on Tuesday with the employment report on Friday.

Currency FX Forecast for Next Week

Currency pair Spot  1-week forecast 1-month forecast
EUR/USD 1.117 1.112 1.125
USD/JPY 108.3 108.6 107.3
EUR/GBP 0.864 0.870 0.845
GBP/EUR 1.158 1.149 1.183
GBP/USD 1.294 1.278 1.331
AUD/USD 0.692 0.688 0.700
USD/CAD 1.314 1.310 1.298
USD/SGD 1.357 1.360 1.353
USD/HKD 7.838 7.840 7.840
NZD/USD 0.644 0.640 0.653
GBP/JPY 140.0 138.8 142.8
GBP/AUD 1.871 1.858 1.902
GBP/NZD 2.010 1.997 2.039
GBP/SGD 1.755 1.738 1.801
GBP/HKD 10.14 10.02 10.44
GBP/CHF 1.276 1.271 1.320

 

Tim Clayton

Tim Clayton is a market analyst with more than 20 years of experience in the financial markets, with particular focus on currencies. Holds an economics degree from University of New York. Writes for multiple publications including Investing.com and SeekingAlpha so he is on top of all the happening in the world of currencies and macro-economics.

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