Global Themes

Last week saw the dollar suffer against a basket of currencies, largely in part to expectations of the Federal Reserve tightening money policy further subsiding.  With original anticipations of an interest rate hike before the end of the year now not certain, investor sentiment has weakened towards the dollar.   With a sparse macro-economic schedule at the beginning of the week markets will eagerly await the raft of data releases from the UK and US from Wednesday onwards.  Varied results are expected from the US data which could allow for the dollar weakness to continue.


The UK has a full macro-economic schedule for the week, including September’s Monetary Policy meeting taking place on Thursday.  With no monetary policy changes expected, market participants will turn their attention to the CPI Inflation data on Tuesday, expected at 2.8% and the Unemployment figures on Wednesday which are forecast to remain at 4.4%. 


Monday trading has seen the Australian dollar slide from the highs it reached at the end of last week.  The aussie dollar has been on a continued upward trend since June but failed to break through a key resistance level of $0.8170 on Friday.  With continued geo-political uncertainty, alongside strong employment figures expected on Thursday from Australia, market participants will pay close attention to the Australian dollar’s ability to continue its strengthening streak.


Only a scattering of data releases are expected from the Eurozone this week.  July Industrial Production on Wednesday is anticipated to be the highlight of these data releases meaning the euro is unlikely to receive much direction from their fundamental indicators.  Focus therefore will turn to the raft of data expected from the UK and US to provide further direction for these currency pairs.


Varied results are expected from the data releases from the US at the end of the week.  On occasion, recent market direction for the dollar has been driven by the geo-political situation along with rhetoric from Washington.   The direction for the dollar in the week ahead will be focused on the fundamentals with emphasis on CPI Inflation data on Thursday, forecast at 1.8%, and August’s Industrial Output and Retail Sales on Friday.

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