2019 August, 19, 01:57:23 AM

Forex Market|Weekly Outlook August 19-23| All Eyes On Powell

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By........Forexcrunch.com

Global markets struggled as signs of an upcoming recession grew. The next moves depend on the Federal Reserve, with the FOMC minutes and Chair Jerome Powell´s speech standing out. Here the highlights for the next week.

The German economy contracted and may be entering a recession. Chinese industrial production growth grew at the slowest since 2002. And US yields have inverted – scaring investors of a recession in the world´s largest economy. Other economic indicators were mixed, with US retail sales rising more than expected but consumer confidence falling. 

Canadian inflation report: Wednesday, 12:30. Canada’s Consumer Price Index has been more robust than in several other developed economies with the Media CPI and the rimmed CPI standing at 2.2% and 2.1% respectively – above the target of 2%. However, headline prices dropped by 0.2% in June. An increase of 0.1% is on the cards for July. Core Median CPI is projected to slow to 2.1%, Trimmed CPI to 2%, and the Common CPI to 1.8%.

FOMC Meeting Minutes: Wednesday, 18:00. How worried are Federal Reserve officials? The question refers to trade tensions and subdued inflation – the factors that resulted in the Fed’s decision to lower rates on July 31st – the meeting that the minutes provides details of. Two voting members dissented and voted against slashing rates and markets will want to know if these hawks were joined by others or if doves on the sidelines wanted even more. While some see the document as stale, it is essential to remember that it is revised until the last moment, with officials aware that markets are watching.

Euro-zone PMIs Thursday, 7:15 for France, 7:30 for Germany, and 8:00 for the whole euro-zone. European economies are slowing down and some are already contracting. Is a recession on the cards? Markit’s forward-looking survey has shown that the manufacturing sector is contracting – driven by German weakness. The largest economy’s manufacturing Purchasing Managers’ Index (PMI) tends to have the greatest impact on the euro, but also data from France moves markets.

ECB Meeting Minutes: Thursday, 11:30. The European Central Bank is set to announce a significant stimulus package in its September meeting, including a rate cut and perhaps a resumption of the bond-buying program. It laid the ground for such a move in its July meeting – and we will now receive details about the Frankfurt-based institution’s expected move. Similar to the Fed’s document, the ECB is well-aware that markets are examining every word and they will work to send a clear message about their intentions. Read More.....

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