Forex Weekly Outlook – May 15-19 2017

The second week of May saw the dollar gaining ground against many currencies despite a political controversy. A mix of events awaits us now: GDP from Japan, jobs from Australia, and housing data from the US. Here are the big events to look out for.

Trump’s firing of FBI Director Comey temporarily stalled the dollar’s rally[1] on worries about the President’s growth agenda. However, this did not last too long. The dollar did struggle with the weak retail sales and CPI[2]. US consuers are spending less than expected and core inflation is below 2% once again. The election of Macron as the next French president[3] was expected, but still, provides a sigh of relief for markets. In the UK, the BOE came out a bit dovish[4] on inflation, wages and despite hopes for a smooth Brexit process. Oil prices managed to recover as inventories fell[5] and OPEC seemed to get closer to extending the deal to cut production.


  1. Chinese Industrial Production: Monday, 2:00. The world´s second-largest economy has recently produced some downbeat figures. The Caixin manufacturing PMI and the trade balance both missed expectations. Will industrial output follow? This is an important event for the Australian dollar but also the rest of the world is watching. After a surprising rise of 7.6% last time, the figure for April could be weaker.
  2. Euro-zone GDP: Tuesday, 9:00. The first release for euro-zone GDP showed a growth rate of 0.5% q/q, higher than in the US. This revision includes more data, most notably from Germany. The largest nation posted a growth rate of 0.6%[6].
  3. US housing data: Tuesday, 12:30. US building permits advanced and reached an annualized level of 1.26 million back in March. Housing starts took the other direction by slipping to 1.22 million. There is a strong correlation between the housing sector and the economy at large. For a meaningful impact on the dollar, both numbers need to go in the same direction.
  4. UK jobs report: Wednesday, 8:30. The UK unemployment rate is at 4.7%, an impressive number. However, wage growth is mediocre, 2.3% in February and is also being eroded by inflation. During the month of March, the number of jobless claims jumped by 25.5K, a worrying sign. The impact goes beyond the data: this is the last jobs report before the elections.
  5. Oil inventories: Wednesday, 14:30. The weekly report by the EIA has gained importance after the recent drop in oil prices and the speculation about a potential extension to the OPEC non-OPEC deal. Apart from inventories of crude oil, watch out for the rising output in the US.
  6. Japanese GDP: Wednesday, 23:50. This is the preliminary report for Q1 2017. Japan’s output tends to fluctuate, with occasional quarters of contraction. However, 2016 was a year of growth. The economy of the third-largest global economy probably expanded also in early 2017.
  7. Australian jobs report: Thursday, 1:30. Australia gained no less than 60.9K jobs in March, far better than expected. Will we a setback now? The unemployment rate remained at 5.9% despite this improvement, but that is due to the rise in the participation rate.
  8. US jobless claims: Thursday, 12:30. The weekly gauge of the US job market has been stable of late. Note that this week’s report is accompanied by the Philly Fed Manufacturing Index for May.

*All times are GMT

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