GemForex - weekly analysis

There were so many key headlines last week. In last week's key headlines, USD/JPY rose to a new 32-year high, supported by stronger-than-expected CPI, and as 10-year interest rates broke the 4% barrier. Japan maintained its position that it will act decisively against market volatility, without actually intervening. The DOW made a historic reversal of 1,500 points on Thursday but surrendered many gains a day later. The Sterling rebounded further as the UK caused episodes of political chaos, and the euro was resilient all week, rebounding after the weak dollar and new rhetoric from the ECB. 

The coming week is likely to be quiet in terms of data, but political headlines from the UK are likely to keep GBP/USD traders sharp. Reports on the BOE's bond-buying program and British leadership will continue to entertain them. Markets will also closely follow Fed officials' speeches throughout the week in the wake of stronger-than-expected U.S. inflation data.

Monday there is no top-quality macro news on either side of the Atlantic, while Tuesday sees the release of Chinese GDP and activity data, which could have a major impact on risk sentiment and ultimately on the high beta currencies. US industrial production and capacity utilization are also reported, as well as the ZEW survey for Germany and the entire Eurozone - a key indicator of economic sentiment. 

The UK CPI data will be published on Wednesday and could play a minor role relative to UK and BOE policy headlines. Still, they will be relevant to the central bank's next policy move and trade incentives for cable. In August, UK inflation unexpectedly fell year-on-year to 9.9% from an expected 10.2%. In addition to the UK figures, investors will also look forward to the US housing figures, the HICP EUR report, and CPI prints for Canada. 

On Thursday, weekly Jobless Claims in the US will come in alongside the Philly Fed Manufacturing Index and Existing Home Sales, although this is unlikely to have a major impact on dollar valuations. UK Retail Sales and Canadian Retail Sales will be closely watched on Friday, in the absence of critical economic data on the US docket, along with Exports & Imports reports for the NZD. Another important point is the JPY CPI, given that the JPY has already risen above the level of the BoJ's previous price intervention and, according to Bank officials, an intervention cannot be ruled out.