US Dollar Might Continue to Struggle

Disappointing September US Non-farm payrolls and growing expectations of the US Fed not moving to scale back its monetary stimulus before 2014 lead to a second week of consecutive losses for the US Dollar. However, concerns over China’s financial stability led by spike in Chinese money-market rates extended some support for the US Dollar at least against commodity currencies like the Australian Dollar, Canadian Dollar and New-Zealand Dollar. Nevertheless, the US Dollar Index (I.USDX), which measures US Dollar against other major currencies, saw a weekly decline of almost 0.5%.

Here is an outlook on the important events line-up for this week.

FOMC Decision – This week’s most important market moving economic event is a two-day FOMC meeting scheduled on Tuesday and Wednesday. At its September meeting, the Fed surprised markets by not tapering the pace of its $85 billion-a-month massive stimulus program. In light of the September jobs report, a government shutdown and recent economic data, that has fallen short of expectations, the central bank, at the end of its two-day meeting on Wednesday, is expected to keep the pace of its asset-purchase program intact and keep its forward guidance on interest rates unchanged.

Investors will also focus on some other key economic releases, that include housing data, manufacturing reports and inflation data, from the US economic calendar in the week ahead.

US Pending Home Sales – Key US housing data, scheduled for release on Monday, features Pending Home Sales for the month of September, released by National Association of Realtors. In August pending home sales declined by 1.6%, indicating slowing US housing market. For the month of September, analysts are forecasting pending home sales to register a gain of 0.5%.

US Retail Sales – US Retail sales for the month of August registered a sluggish growth of 0.2% versus the expectation of 0.5%. Meanwhile, core retail sales that excludes auto sales also came in softer than expected. For the month of September, economists are anticipating retail sales to rise by 0.3% and core retail sales is expected to register a gain of 0.4%.

US Consumer Confidence – The Conference Board (CB) is scheduled to released its Consumer Confidence Index for the month of October on Tuesday. In September the US CB Consumer Confidence Index just fell short of consensus estimates and moderated further to 79.7 from 81.5 in August. The index is now projected to decline sharply to 76.0 for the month of October.

Inflation Data – US headline inflation number measured by Consumer Price Index (CPI) has been stable and remained subdued throughout this year, running well below the Fed’s target of 2%. The government is scheduled to release September inflation figures on Wednesday. This time around, both CPI and core CPI for the month of September, are predicted to come-in at 0.2%.

Also watch for Producer Price Index (PPI), scheduled for release on Tuesday. After edging up to 0.3% in the month of August, economists expect PPI to show a smaller rise of 0.2% in September, while core PPI, that excludes food and energy, is expected to remain muted.

ISM Manufacturing PMI – This week’s US economic data ends with the release of the Institute for Supply Management’s (ISM) manufacturing PMI data. After three consecutive months of better-than-expected reading and rising for four consecutive months, the ISM manufacturing PMI for the month of October, scheduled for release on Friday, is expected to show a drop to 55.3 from 56.2 recorded in the month of September.

Other important economic data from the US, include ADP report that shows the number of private jobs created in the month of October and is scheduled for release on Wednesday.

Other influential events affecting majors

The upcoming week’s Japanese economic calendar features Preliminary Industrial Production data, scheduled on Wednesday, and BoJ monthly monetary policy statement, scheduled on Thursday. On Thursday, BoJ is scheduled to communicate its monetary policy decision and most of the economists expect a little in terms of any major policy action or fresh monetary easing measures from the central bank.

Important economic releases featuring this week’s Euro-zone economic calendar includes Gfk German Consumer climate, scheduled for release on Tuesday, Spanish flash GDP, scheduled on Wednesday. Further, German retail sales, Euro-zone CPI Flash estimate and Euro-zone Unemployment rate are scheduled for release on Thursday.

Being Australia’s largest trading partner, Chinese economic data will be very much in focus for any material impact on commodity currencies including the Australian Dollar. The official Chinese Manufacturing PMI data and the final HSBC manufacturing PMI for the month of October are scheduled for release on Friday.

Also watch for UK manufacturing PMI for the month of October, scheduled for release on Friday and is expected to drop marginally to 56.5 from lower-than-expected reading of 56.7 in September.

• Last week’s jobs report showed sluggishness in the US labor market, playing down the speculation of Fed curtailing its massive bond-purchase program before early next year.
• With important economic events, including the FOMC decision and release of manufacturing PMI figures, scheduled for release in the upcoming week, investors are likely to confront some choppiness and possibly another week of additional volatility in the currency market.
• Absence of any positive news from the US would increase the risk of further suffering for the US Dollar. However, any surprising clue of tapering Fed’s monetary stimulus would be highly supportive for the US Dollar.

• Original Article: Admiral Markets and hyper link Admiral Markets with http://www.admiralmarkets.com/