Forex Weekly Outlook September 11-15

The US dollar plunged against its counterparts last week following increased Hurricane damage and North Korea missile threat. These uncertainties weighed on economic activities and plunged new job creation. The labor market added fewer jobs, 156,000, in August than expected, below the 180,000 jobs projected by economists and 189,000 recorded in July.

Also, while the second quarter economic growth was revised up to 3 percent from 2.6 percent previously reported, wage growth remained lackluster, rising just 0.1 percent in August. Another reason the markets doubt the Fed will raise rates anymore this year, especially with the US economic activities expected to be impacted by the Hurricane damage in the third and fourth quarters. Hence, the reason the odds dropped to 25 percent from 50 percent last week.

However, the services sector sustained growth, factory activities and private businesses added more jobs. Indicating the economy remains healthy, but surged in uncertainties is weighing on the overall outlook.

This week, GBP/AUD, EUR/CAD, EUR/GBP, NZD/JPY and GBP/JPY top my list.

GBPAUD

While the Pound Sterling remained weak and largely weighed upon by the ongoing Brexit negotiation. The embattled currency has defiled some predictions as certain sectors, like the manufacturing sector, remain resilient. Also, the possibility of the Monetary Policy Committee raising rate later in the year due to surging inflation rate is aiding the Pound resilience.

The Australian dollar, on the other hand, dipped last week against the pound and few other currencies after data showed the economy grew by 0.8 percent in the second quarter but household savings declined while wage growth remains weak. Growing by just 0.3 percent in the quarter and 2.1 percent year-on-year.

Again, while the drop in savings signaled a surge in consumer confidence, the flat retail sales and the decline in trade surplus to 0.46 billion in July from 0.89 billion in June says otherwise.  Accordingly, the Reserve Bank of Australia governor, Philip Lowe said in a statement that the higher Australian dollar exchange rate is expected to weigh on price pressures in the economy and hurt economic output and employment. This suggests that despite the surge in commodity prices and growing economy, the apex bank may not raise rate anytime soon.