Weekly trading forecast November 12 - 16

The economic calendar for the week ahead is full of important events. The global financial markets passed the risk factors of major central banks rate decisions, however, several concerns remained in focus for investors. The global issue is inflation which is widely expected to accelerate in the second half of 2018, especially in the largest economy in the world - the United States. So, the headliner of the upcoming week is the Consumer Price Index in the U.S. which could follow stronger-than-expected PPI on last Friday. If that happened, global stock indices might face a heavier selling pressure on risk aversion. Currency market could be influenced by such investors’ sentiment with an additional demand for safe-haven currencies such as the U.S. dollar, Japanese Yen and Swiss Franc. Inflation will be also in focus for other regions as well as Gross Domestic Product reports in European Union, China and Japan. Finally, traders will listen to ECB President and FOMC Chairman in order to understand the next steps of the most powerful central banks worldwide. Commodity markets will pay attention to the ongoing talks about the OPEC production cut and the U.S. Crude Oil inventories in the light of black gold price declining six weeks in a row. The overall price action promises to be extremely volatile as we are heading into the final stage of the year.

Monday, November 12.

Asian trading session will start the trading week with PPI report which is expected to ease the inflationary pressure in the third largest economy in the world in October. That is not a supportive factor for Japanese Yen as Bank of Japan uses the low level of inflationary pressure as the justification for the ultra-soft monetary policy. USD/JPY is seen upwards for the upcoming week with the first target of 115.00 as the strong resistance level. Inflation in India will answer the question about the local central bank to keep raising the borrowing costs in the country. The rest of the emerging markets currencies are vulnerable to the inflationary pressure concern as well. European and North American trading sessions are free of any important events except the French BTF Auction and the speech of FOMC Member Daly. Lower volatility eyed for Monday.

FOMC Member Daly
Source: Bloomberg

Tuesday, November 13.

The average trading volume should pick up on Tuesday with a much busy economic calendar. Australia reports NAB Business Confidence and Aussie bulls will hope for an improvement to develop the recovery bounce versus the greenback. Financial conditions in China are going to bring some light on the situation with the second largest economy in the world with M2 Money Supply, New Loans Volume and Outstanding Loan growth in October. Traders’ sentiment is dependant on the Chinese outlook in the scope of negative global economic outlook. German Consumer Price Index is crucial for EUR/USD as the pair keeps hovering around year low levels near 1.1300. If the inflation missed the market expectations, we could see the single European currency plunging below the important technical support level, opening the door for Euro bears to chart a new downtrend bottom. Besides the Brexit talks, which are on a negative side throughout the weekend so far, the British economy will report Average Earnings Index as well as Claimant Count Change and the Unemployment rate. The market consensus is quite modest, leaving the room for a positive surprise. However, the sterling pairs remain under the selling pressure with GBP/USD leading the losses. ZEW institute will report economic expectations index in Germany and Eurozone which is forecasted to improve somewhat compared to the previous periods. Eurogroup meeting will start on Tuesday and finance ministers will discuss future monetary policy in the European Union. OPEC monthly report is extremely important for oil bulls trying to find any support for WTI Crude price which seems to be losing the ground. Federal Budget Balance and FOMC Member Brainard’s speech - these are the only events in the American trading session.

Wednesday, November 14.

Overnight data continues with Australian Westpac Consumer sentiment report and Wage Price Index for the third quarter. An increased volatility is expected in the Asian trading session during the Japanese Gross Domestic Product report. The analysts agree on the third largest economic growth to decline in the third quarter with the consensus of -1.0% compared to the rise in the second quarter at 3.0%. The event is about to show whether the expectations of the decline are overestimated and the things aren’t so bad, or should equities investors start worrying about their long-term bullish positions in NIKKEI stick index. Chinese data is also due to release at 02:00 AM GMT with the headline of Industrial Production report which is expected flat at 5.8% level. Retail Sales and Chinese Unemployment rate will come in at the same time. European trading session is also going to be extremely volatile. German Gross Domestic Product is forecasted to decline on a quarterly basis. If that confirmed, Euro could extend losses versus the U.S. dollar. French Consumer Price Index should remain at the same level as previously and no major impact is eyed from that news. British inflation figures will be released at 09:30 AM GMT and the sterling traders will watch those reports very closely. As the GDP stagnates in the UK, an additional inflationary pressure might hurt the British economy. On the other hand, the Bank of England should start hiking the interest rates because of the inflationary pressure. Anyway, the most probable reaction of the sterling traders is to keep selling the currency. Eurozone GDP and Industrial Production reports finish the busy trading session. However, the most interesting part of the day will just start in New York with the release of the Consumer Price Index at 01:30 PM GMT. An extreme volatility is forecasted with a more bullish bias for the greenback and bearish outcome for the U.S. equities as inflationary pressure is expected to accelerate in October. Crude Oil Inventories and API weekly crude oil stock - these are the key events for oil traders on Wednesday.

Thursday, November 15.

The roller coaster should keep traders in shape on Thursday with the economic calendar packed with crucial events. Australian employment change in October will be accompanied with RBA Assistant Governor Debelle’s speech. Aussie traders will try to save AUD/USD from falling in the light of the greenback’s strength across the board. However, if the local economy will fail to perform strongly, the bears will take the market under control completely with the nearest support levels will appear in danger to be breached. British Retail Sales are seen in the positive territory but the pace of the growth leaves a lot of questions about the future outlook. If the report declined, the sterling might accelerate its losses towards fresh year lows. The U.S. calendar is also packed with headliners of Retails Sales and Philadelphia Fed manufacturing index. Any stronger-than-expected reading is positive for U.S. equities struggling to come back to the all-time high levels after the October’s crash. Investors will also try to catch every single word of the Federal Reserve Chairman Jerome Powell during his speech which is scheduled for 04:30 PM GMT. Any hawkish comments might hurt the stock indices recovery as the acceleration in the interest rates growth is negative for corporate profits.

Friday, November 16.

ECB President Mario Draghi will also speak and European traders will hope for a clear view in terms of the tightening cycle start. Although, a more dovish rhetoric is more likely as the export-oriented German and French economies are interested in the lower exchange rate of the single European currency, helping them to get an additional competitive advantage on external markets. The price action of EUR/USD will be also influenced by the EU CPI reported at 10:00 AM GMT. A comparatively quiet trading session is expected on the other side of the Atlantic on Friday.
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