​US Fed Returns Demand For the USD (Weekly Review)

2018-10-02
The main event of the past week was the meeting of the Federal Open Market Committee of the US Federal Reserve. Despite periodic negative remarks by President Donald Trump regarding the Fed's monetary policy, it was expected to announce another interest rate increase of 0.25%, which, in fact, happened. Drawing first attention to the minutes of the meeting, from which the wording “stimulating” disappeared, and sold the dollar, but soon the USD was bought out, which led to its growth across the entire spectrum of the market.

The Federal Reserve positively assesses the prospects for the growth of the labor market and economic activity and suggests four more rate increases - one more this year, two the next year, and one in 2020. The last week macroeconomic statistics for the USA, and in particular data on GDP, generally confirmed the stability of the country's economy, so there is no reason for the Fed to take a pause in the rate increase at this stage, but do not forget about the risks to the economy amid trade wars and sanctions imposed by the United States against a number of countries.

Tightening the Fed's monetary policy makes the USD a favorite, and also contributes to the flight of investors from emerging markets, which, in its turn, stimulates the purchase of US currency. Thus, the EUR, which at the beginning of the last week tried to continue the growth of the USD, underwent a sale again, and pressure on it increased the desire of populists in Italy to increase government spending, which could lead to a conflict situation with the EU. Its fall last week gives reason to assume the return of the EURUSD in the mainstream of the downward trend, but the bulls on the USD should still be extremely cautious.

Schedule for this week:

Monday, October 1
08:30 GMT – United Kingdom. Mortgage Approvals;
08:30 GMT - United Kingdom. Markit Manufacturing Purchasing Managers Index (PMI);
09:00 GMT – Eurozone. Unemployment Rate;
13:30 GMT – Canada. Manufacturing Purchasing Managers Index (PMI);
14:00 GMT – USA. ISM Manufacturing Purchasing Managers Index (PMI);
14:00 GMT – USA. ISM Manufacturing Prices Paid Index.

Tuesday, October 2
21:00 GMT – New Zealand. NZIER Business Confidence (QoQ) (Q3);
04:30 GMT – Australia. Reserve Bank of Australia (RBA) Interest Rate Decision;
04:30 GMT – Australia. Reserve Bank of Australia Rate Statement;

08:30 GMT – United Kingdom. Construction Purchasing Managers Index (PMI);
09:00 GMT – Eurozone. Producer Price Index (PPI);
12:55 GMT – USA. Redbook Index;
13:45 GMT – USA. ISM - NY Business Conditions;
14:00 GMT – New Zealand. GlobalDairyTrade Price Index;
16:45 GMT – USA. Fed Chair Jerome Powell Speaks.

Wednesday, October 3
01:30 GMT – Australia. Building Approvals;
07:55 GMT – Germany. Markit Composite Purchasing Managers Index (PMI);
07:55 GMT – Germany. Markit Services Purchasing Managers Index (PMI);
08:00 GMT – Eurozone. Markit Composite Purchasing Managers Index (PMI);
08:00 GMT – Eurozone. Markit Services Purchasing Managers Index (PMI);
08:30 GMT – United Kingdom. Markit Services Purchasing Managers Index (PMI);
09:00 GMT – Eurozone. Retail Sales;
11:00 GMT – USA. MBA Mortgage Applications;
12:15 GMT - USA. ADP Nonfarm Employment Change;
13:45 GMT - USA. Markit Services Purchasing Managers Index (PMI);
13:45 GMT - USA. Markit Composite Purchasing Managers Index (PMI);
14:00 GMT - USA. ISM Services Purchasing Managers Index (PMI).

Thursday, October 4
23:50 GMT – Japan. Foreign Investments in Japanese Stocks;
23:50 GMT – Japan. Foreign Bonds Buying;
00:00 GMT – Australia. New Home Sales;
00:30 GMT – Australia. Trade Balance;
00:30 GMT – Australia. Import/Export;
12:30 GMT – USA. Initial Jobless Claims;
14:00 GMT – Canada. Ivey Purchasing Managers Index (PMI);
14:00 GMT – USA. Factory Orders.

Friday, October 5
00:30 GMT – Australia. Retail Sales;
06:00 GMT – Germany. Factory Orders;
06:00 GMT – Germany. Producer Price Index (PPI);
07:30 GMT – United Kingdom. Halifax House Price Index;
12:30 GMT – USA. Trade Balance;
12:30 GMT – USA. Unemployment Rate;
12:30 GMT – USA. Nonfarm Payrolls;
12:30 GMT – USA. Average Hourly Earnings;

12:30 GMT – Canada.  Employment Change;
12:30 GMT – Canada. Unemployment Rate;
12:30 GMT – Canada.  Import/Export;
19:00 GMT – USA. Consumer Credit.

Author: Anthony Porter, IAFT Analyst

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