Forecasting the Coming Week: Fedspeak, Powell and PCE grab all the attention

The Greenback wrapped up its third straight week of losses, with the decline deepening after the Federal Reserve's jumbo rate cut on September 18. The currency's weakness persisted as investors weighed the chances of more rate cuts later in the year, while the likelihood of a soft landing of the US economy also favoured the appetite for the risk-associated assets.

The US Dollar Index (DXY) remained under heavy pressure for the third straight week, hitting levels last seen in the summer in 2023 around 100.20 soon after the Fed’s interest rate decision. The US docket kickstarts on September 23 with the release of the advanced S&P Global Manufacturing and Services PMIs. Next on tap comes the FHFA’s House Price Index on September 24, followed by the Conference Board’s Consumer Confidence and the API’s report on US crude oil inventories. The usual weekly Mortgage Applications measured by MBA, New Home Sales, and the EIA’s report on US crude oil stockpiles are due on September 25. On September 26 come the Durable Goods Orders, the final revision of the Q2 GDP Growth Rate, Pending Home Sales, and weekly Initial Jobless Claims. The PCE takes centre stage on September 27, seconded by Personal Income, Personal Spending, advanced Goods Trade Balance, and the final Michigan Consumer Sentiment.

EUR/USD resumed its weekly advance and surpassed the 1.1100 barrier with certain conviction, always on the back of further weakness in the US Dollar. The flash HCOB Manufacturing and Services PMIs in Germany and the EMU are due on September 23, while Germany’s IFO Business Climate comes on September 24. The GfK’s Consumer Confidence in Germany and the ECB’s M3 Money Supply are due on September 26. The release of the German labour market report is scheduled for September 27, followed by EMU’s Economic Sentiment, final Consumer Confidence, Industrial Sentiment, and Consumer Inflation Expectations.

GBP/USD outperformed its risk peers this week, rising well north of 1.3300 the figure for the first time since February 2022, amidst increasing appetite for the risk complex, the cautious hold by the BoE, and firm UK data. The S&P Global Manufacturing and Services PMIs are due on September 23, along with CBI Industrial Trends Orders. On September 26 will be published the Car Production figures, while the CBI Distributive Trades are due on September 27.

The steep decline in USD/JPY that kicked in in early July appears to have met quite decent contention around the 139.50 zone amidst the resurgence of the risk-on trade and renewed dovishness around the BoJ. The preliminary Jibun Bank Manufacturing and Services PMIs are due on September 24, followed by the publication of the BoJ Minutes and Foreign Bond Investment figures on September 25. In addition, the Tokyo CPI comes on September 26, while the final Coincident Index and Leading Economic Index are expected on September 27.

AUD/USD finally managed to clear the 0.6800 hurdle and advanced to levels last traded in late 2023 on the back of firm appetite for the risk-linked universe, the weak US Dollar, and some modest recovery in commodity prices. The flash Judo Bank Manufacturing and Services PMIs come on September 223, while the RBA will be at the centre of the debate on September 24. The RBA’s Monthly CPI Indicator comes on September 25, and the RBA’s Financial Stability Review is due on September 27.  

Anticipating Economic Perspectives: Voices on the Horizon

• The Fed’s Bostic, Goolsbee, and Kashkari speak on September 23, along with the ECB’s Cipollone and Elderson.
• The Fed’s Bowman and the ECB’s Nagel will speak on September 24.
• The Fed’s Kugler, the ECB’s McCaul and the BoE’s Greene are all due to speak on September 25.
• The ECB’s McCaul, De Guindos, Buch, Elderson, Schnabel, and Lagarde will all speak on September 26, along with the Fed’s Barr, Bowman, Cook, Collins, Kugler, Williams, Kashkari, and Powell.
• The Fed’s Bowman is expected to speak on September 27, followed by the ECB’s Cipollone, Nagel and Lane.

Central Banks: Upcoming Meetings to Shape Monetary Policies

• The RBA and the Hungarian central bank (MNB) will meet on September 24.
• The Riksbank will decide on rates on September 25.
• The SNB and Banxico will meet on September 26.