Forecasting the Coming Week: The Fed’s key meeting set to influence market moves

The US dollar succumbed to sustained selling pressure over the past few days, leading to its second consecutive weekly decline. This weakness comes amidst growing expectations of a rate cut by the Federal Reserve on September 18, with most market participants betting on a 25 basis point reduction.

The US Dollar Index (DXY) added to Thursday’s losses and retested once again the sub-101.00 region on Friday, ending its second consecutive week in negative ground. The New York Empire State Manufacturing Index kicks off the US calendar on September 16. A busy docket on September 17 will see Retail Sales, Industrial and Manufacturing Production, Business Inventories, the NAHB Housing Market Index and the API’s report on US crude oil inventories. The Federal Reserve’s interest rate decision takes centre stage on September 18, seconded by the usual weekly Mortgage Applications gauged by MBA, the EIA’s report on US crude oil stockpiles, Building Permits, Housing Starts, and TIC Flows. The weekly Initial Jobless Claims are due on September 19, followed by the Philly Fed Manufacturing Index, Exiting Home Sales, and the CB Leading Index.

EUR/USD rose to weekly tops past the 1.1100 barrier, although it failed to extend the move beyond that region on a more sustainable fashion and ended the week slightly on the defensive. The EMU’s Balance of Trade, Labour Cost Index and Wage Growth are all expected on September 16. The Economic Sentiment tracked by the ZEW institute in the euro area and Germany will be published on September 17. The EMU’s final Inflation Rate is due on September 18, while the Current Account results will be release on September 19. On September 20 comes Germany’s Producer Prices and the advanced Consumer Confidence reading in the euro bloc by the European Commission.

GBP/USD lost some of its earlier gains after reaching the 1.3160 area on Friday, but it still managed to hold onto a positive performance for the week. The publication of UK Inflation Rate is due on September 18. The BoE will meet on September 19, while Retail Sales, the GfK Consumer Confidence and Public Sector Net Borrowing are all due on September 20.

USD/JPY dropped to new 2024 lows in the 140.30-140.25 band on the back of the weaker US Dollar and declining US yields. The Tertiary Industry Index is due on September 17, seconded by Balance of Trade results and Machinery Orders on September 18. The usual weekly Foreign Bond Investment data will be published on September 19. The BoJ will meet on September 20, along the release of the Inflation Rate.

Although AUD/USD experienced modest losses on Friday, it successfully ended two consecutive weeks of declines and resumed its upward trend with solid momentum. The Westpac Leading Index comes on September 18, ahead of the release of the labour market report on September 19

Anticipating Economic Perspectives: Voices on the Horizon

• The Federal Reserve Bank of Dallas President Lorie Logan speaks on September 17. Still, she isn't expected to talk about monetary policy because the Fed is within its blackout period.
• The Reserve Bank of Australia (RBA) Assistant Governor Brad Jones and the Bank of Canada (BoC) Senior Deputy Governor Carolyn Rogers will speak on September 18, along with the Bundesbank President and European Central Bank (ECB) board member Joachim Nagel.
• The ECB’s Nagel and the BoC Deputy Governor Nicolas Vincent are due to speak on September 19.
• The Federal Reserve Bank of Philadelphia President Patrick Harker, the Bank of England (BoE) Monetary Policy Committee member Catherine Mann, the BoC Governor Tiff Macklem, and the ECB President Christine Lagarde are due to speak on September 20.

Central Banks: Upcoming Meetings to Shape Monetary Policies

• The Federal Reserve and the Bank Indonesia (BI) will decide on rates on September 18.
• The Norges Bank, the SARB, the BoE and the CBRT will all meet on September 19.
• The Bank of Japan (BoJ) meets on September 20.