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Weekly Analysis and Recommendation:
The GBP/USD climbed most of the week after continued strong economic data and guidance from the Bank of England supported the currency. The Great British Pound closed the week at a recent high of 1.5878 and is looking to break above the 1.59 level. The markets are very dependent on the final decision of the FOMC due on Thursday. UK house prices will be in focus again with Right move’s update after another measure produced by the Royal Institution of Chartered Surveyors reported that average house prices hit the highest level since November 2006. Soaring house prices and falling unemployment have the markets testing the BoE’s forward guidance, and rightly so. A significant nearly three-quarters of a percentage point drop in the unemployment rate so far this year has markets questioning why the BoE thinks the rate will take more than three additional years to drop another 0.6% to its 7% threshold before contemplating rate hikes that markets are pricing to occur well before then. The issue is not in being too hasty to judge the BoE’s adoption of forward guidance in August; the issue is why it chose to make its guidance for no rate hikes until late 2016 contingent upon such a small further improvement in the unemployment rate. In defense of the BoE, however, its forward rate language retained significant flexibility to depart from UR-based guidance if needed, and partly in the name of financial stability considerations. UK CPI, retail sales and minutes to the September 5th BoE meeting will round out the market influences next week and add further color to whether the BoE’s forward rate experiment will ultimately prove successful.
Traders also continued to watch for developments on the Syrian conflict. The threat of U.S.-led military strikes against the Middle Eastern country has receded as Secretary of State John Kerry continues to pursue diplomatic negotiations over Syria’s chemical weapons.
Speculation about who will succeed Fed Chairman Ben Bernanke was also in the spotlight on Friday. The White House denied a report by Japanese newspaper Nikkei, citing unnamed sources, that said President Barack Obama plans to name former U.S. Treasury Secretary Lawrence Summers as the next Fed chairman possibly as soon as next week. Mr. Summers is seen as more skeptical toward quantitative easing than Janet Yellen, who is also one of the front-runners to succeed Bernanke.
FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more recent analysis and information in our weekly reports and we provide daily updates and outlooks.
Major Economic Events for the week of September 9-13 actual v. forecast for Euro, GPB, the Franc, and USD
Chinese Fixed Asset Investment (YoY)
Chinese Industrial Production (YoY)
French Non-Farm Payrolls (QoQ)
Historical: From 2011 to Present
Highest: 1.6618 USD on Aug 19, 2011
Average: 1.5764 USD over this period
Lowest: 1.4832 USD on Mar 12, 2013
Economic Highlights of the coming week that affect the Euro, GBP, CHF and the USD
Government Bond Auction
Date Time Country
Sep 16 09:00 Slovakia
Sep 16 09:10 Norway
Sep 17 08:30 Spain
Sep 17 09:30 Belgium
Sep 18 09:10 Sweden
Sep 18 09:30 Germany
Sep 18 09:30 Portugal
Sep 19 08:30 Spain
Sep 19 08:50 France
Sep 19 09:30 UK
Sep 19 09:50 France
Sep 19 15:00 US
Sep 19 17:00 US
Sep 20 15:30 Italy
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