Market -Weekly Outlook Oct 09 2017

Investors will keep an eye out on minutes of the Federal Reserve’s latest policy meeting on Wednesday as well as Friday's U.S inflation data to look for more hints on the timing of the next U.S. rate hike.

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Last Week Recap

The U.S dollar fell on Friday after weak U.S jobs report. The US economy lost 33,000 jobs in September, according to the Labor Department, ending seven straight years of job growth. But that sounds normal since the decline was driven by slow hiring due to the effects of the Irma and Harvey hurricanes. The unemployment rate fell to 4.2%, the lowest since 2001supporting the U.S dollar but Economists expect wage data from the US jobs report for September to boost inflation.

Stock market: Economists’ expectations of raising U.S interest rates supported the dollar by making US assets more attractive to investors seeking returns.

Last week, the Eurodollar topped at 1.1814 levels, bottomed at the 1.1668 levels and closed at the 1.1733 levels, selling on rebound remains a good strategy for EURUSD pair.

The British pound fell against the U.S dollar to the 1.3026 levels, from 1.3401 levels, ended the week at the 1.3062 levels, selling on a rebound is recommended.

Despite the slow movement against the U.S dollar, the Japnese Yen remains up as long as trades above the 111.47 levels with eyes on the 115.00 levels…

Gold remains down against the U.S dollar, while WTI crude Oil sees a consolidation with downside bias in the short term.

U.S Dollar Index Bullish, Eyes The 95.00 Levels!

The U.S Dollar Index maintained a bullish momentum last week. Bottomed at the 92.94 levels and topped at the 94.05 levels. This development leaves the index targeting the 95.00 levels. A halt is likely and it may turn lower from here but a breakthrough the 95.00 levels will aim the 96.00 levels, further upside, resistance comes at the 97.47 levels.

On the downside. A failure to hold above 94.05 levels on a weekly closing basis could mean a return to the 92.94 levels. Buyers should return here and push it to the upside but if this fails to occur, more decline will be seen to the 91.00 levels…Anyway: The U.S Dollar index continues to face upside threats above the 92.94 levels in the medium-term forecast.

On a daily timeframe. The index remains bullish above 92.94 levels, last week, the index was rejected from static resistance 93.75 as we expected on Friday, immediate support comes at the 93.47 levels. A cut through this level on a daily basis would open main support at the 92.94 levels. Below that level should weaken the recent rise. But the pair still supported well around 92.45/91.95 levels.

On the upside. A daily closing above 93.47 will restore the upside trend. Above 94.05 will accelerate the expected bullish move to the 94.95 levels. The next resistance stands at the 95.57 levels ahead of the 96.07 levels.

Keep in mind that we have a strong demand zone at the 92.94 levels (daily & weekly support level).

USDINDEX Weekly Chart – Click to enlarge
USDINDEX Daily Chart – Click to enlarge

Ahead of the coming week, here is a list of the biggest events on the economic calendar that are most likely to affect the markets this week:

Investors will keep an eye out on minutes of the Federal Reserve’s latest policy meeting on Wednesday as well as Friday’s U.S inflation data to look for more hints on the timing of the next U.S. rate hike.

Monday, October 9

Financial markets in Japan will be closed for a holiday.

In Canada, markets are to remain closed for the Thanksgiving Holiday.

Tuesday, October 10

The UK will publish reports on manufacturing production and the trade balance at 08:30 GMT.

Minneapolis Fed President Neel Kashkari will speak at 14:00 GMT.

Wednesday, October 11

Dallas Fed President Robert Kaplan will speak at 00:00 GMT.

The Fed will publish the minutes of its latest policy meeting at 18:00 GMT.

Thursday, October 12

The U.S will release data on producer price inflation and jobless claims.

ECB President Mario Draghi will speak at an event in Washington at 14:30 GMT. Fed Governors Jerome Powell and Lael Brainard are also expected to comment on the same event.

The U.S  Energy Information Administration will release weekly data on oil and gasoline stockpiles at 15:00 GMT.

Friday, October 13

The U.S will end the week with reports on inflation and retail sales, as well as preliminary data on consumer sentiment.

You can follow the rest of the week’s economic events by visiting:

Conclusion: Since the U.S dollar is bullish. This week’s economic news can be seen as an opportunity to buy the dollar on dips.