As you find your footing in this trading week, it’s important to be aware of several key events that are poised to significantly sway the market. Despite today’s calm, the upcoming days are brimming with economic reports and central bank announcements that could inject volatility into the markets.
Tuesday: Unemployment and Manufacturing Data
Tuesday brings data from Britain, including the Claimant Count Change and Unemployment Rate. These figures can impact the value of the GBP, with higher unemployment potentially weakening the currency. Simultaneously, both the Eurozone and the USA will release their Flash Manufacturing PMI and Flash Services PMI.
These indicators provide insights into the health of the manufacturing sector—a critical component of the economy—thus impacting EUR and USD respectively. Additionally, remarks from Australia’s Governor RBA Bullock might influence AUD depending on the tone and content of his speech.
Wednesday: Inflation Figures and Monetary Policy Reports
Wednesday unveils Australia’s CPI figures (both q/q and y/y) and Trimmed Mean CPI q/q. These inflation indicators can affect the AUD as they might influence the Reserve Bank of Australia’s monetary policy decisions. Germany’s Ifo Business Climate index, a leading indicator of economic health, can sway the EUR.
From Canada, look out for the BOC Monetary Policy Report, Overnight Rate, and Rate Statement, which can impact the CAD. US new home sales data, a key gauge of the US economy’s health, will also be released. The day concludes with speeches from BOC and ECB President Lagarde, as well as Fed Chair Powell, which may influence CAD, EUR, and USD respectively.
Thursday: Central Bank Updates and Diverse US Data
Thursday begins with another speech from RBA Governor Bullock, followed by the ECB’s Main Refinancing Rate and Monetary Policy Statement, which can affect the EUR. Later in the day, the US will release a slew of data, including Advance GDP q/q, Unemployment Claims, Advance GDP Price Index q/q, Core Durable Goods Orders m/m, Durable Goods Orders m/m, and Pending Home Sales m/m.
These data points provide insights into the US economy’s health and can influence the USD. Keep an ear out for any comments from FOMC members as well.
Friday: Inflation and Consumer Sentiment
Friday concludes the week with Japan’s Core CPI y/y, which can impact JPY, and New Zealand’s RBNZ Statement of Intent, which might influence NZD. In the USA, the Core PCE Price Index m/m and Revised UoM Consumer Sentiment will be released. These indicators provide insights into inflation and consumer confidence, two key factors that can sway the USD.
In conclusion, this week is filled with potential market-moving events. As always, staying informed and vigilant is crucial to successfully navigating the market’s ebbs and flows. Happy trading!
EUR/USD Pair Surges Above 1.0600 Amid Market Optimism and Upcoming Key Events
The EUR/USD currency pair is trading above the 1.0600 mark as a subtle shift in market sentiment takes place. Market participants have reacted positively to news that Israel has postponed a ground invasion into the Gaza Strip while negotiations for the release of hostages held by Hamas are underway.
EURUSD Daily Chart
Despite a dip in government bond yields keeping the US Dollar somewhat subdued, a resurgence in yields before the opening of Wall Street failed to overturn the initial upward trend.
US Treasury Note and Economic Concerns
In pre-opening trade, the 10-year United States Treasury note yielded as much as 5.02%, the highest level since July 2007, sparking worries about the nation’s economic advancement. Yields are climbing following comments from Federal Reserve Chairman Jerome Powell, who emphasized the central bank’s commitment to bringing inflation back down to 2%, a level he still considers excessively high.
Market Caution Before Major Events
Investors are expressing caution ahead of major events on the calendar this week. The European Central Bank (ECB) is set to make its monetary policy decision on Thursday. Meanwhile, by week’s end, the US will reveal preliminary estimates for Q3 Gross Domestic Product (GDP) and the September Personal Consumption Expenditures (PCE) Price Index.
Monday’s Macroeconomic Updates
Monday’s macroeconomic agenda was relatively light. Germany’s Bundesbank released its monthly report, while the US disclosed the Chicago Fed National Activity Index, which rose to 0.02 in September from a revised -0.22 the previous month. Later in the day, the Euro Zone is expected to release a preliminary estimate of October Consumer Confidence, previously reported at -17.8.
The Dollar Index Analysis
Simultaneously, the US Dollar Index (DXY) is exhibiting volatility around the 106.00 mark as market attention shifts towards the upcoming announcement of US GDP data for Q3 (July-September). This critical data point is scheduled for release on Thursday.
DXY Daily Chart
GBP’s Resurgence and Market Anticipation
The Pound Sterling (GBP) is demonstrating a significant bounce back as the market eagerly awaits the UK Employment data due to be released on Tuesday. This anticipation has triggered a shift towards a more buoyant risk profile.
Despite this, the broader perspective for the GBP/USD pair remains shaky, with industry experts forecasting a decline in employment figures for the three-month span up to August. This downward trend implies that companies are reducing their workforce numbers in response to a gloomy demand outlook.
GBPUSD Daily Chart
Impact of BoE’s Policies on Household Incomes and Demand
Interest rate hikes implemented by the Bank of England (BoE), in combination with unyielding inflation, have considerably burdened household incomes, resulting in suppressed demand.
External Factors Adding to Economic Uncertainty
The intensifying conflict between Israel and Palestine adds another layer of uncertainty, with the potential to propel energy prices upwards, thereby fueling inflation even further.
Investor Predictions for BoE’s Upcoming Decision
In light of these circumstances, investors are forecasting that the BoE will opt to maintain interest rates at their current level for the second consecutive month in November.
Global Market Review and Outlook Amid Rising Tensions and Yields
Global Equity Markets Under Pressure
Last week, global equity markets experienced significant declines due to escalating tensions in the Middle East and a surge in US Treasury yields. The Federal Reserve Chair Jerome Powell’s openness to additional tightening actions contributed to these developments.
Indices like the MSCI All Country World index, the S&P 500 index, and the Nasdaq 100 index all saw drops of around 2.4% to 2.8%. European markets followed suit with Germany’s DAX 40 and UK’s FTSE 100 both dropping by 2.6%. Asian markets were not spared either, with Hong Kong’s Hang Seng index falling by 3.6% and Japan’s Topix decreasing by 2.3%.
|MSCI All Country World||-2.4%|
Currencies and Commodities: Winners and Losers
Risk-sensitive currencies such as the Australian dollar and the New Zealand dollar mostly saw decreases, while Bitcoin experienced a nearly 10% increase during the week.
The US Treasury 10-year yield reached its highest level since mid-2007 after Powell recognized the impact of tightening financial conditions but did not rule out further tightening due to the strength of the economy and tight labor markets. This rise in yields occurred despite fears of an escalation in the Middle East conflict. The flight-to-safety has pushed up gold to the highest level in 5 months.
Key Events in the Week Ahead
Looking ahead, the focus will be on the European Central Bank’s interest rate decision on Thursday, which is widely expected to remain unchanged. Other key events include Germany’s GfK Consumer Confidence report, Germany’s HCOB Manufacturing PMI Flash, and UK jobs data on Tuesday. Australia’s Q3 CPI, Germany’s Ifo Business Climate, and the Bank of Canada interest rate decision are due on Wednesday. On Thursday, the US will release its durable goods orders and Q3 GDP data. The US Core PCE Price Index data is due on Friday.
Market Forecasts and Corporate Earnings
The upcoming week will also see forecasts for the US dollar, oil, Euro, gold/silver, Japanese Yen, Australian Dollar, and British Pound. Corporate earnings from tech giants Alphabet, Microsoft, and Amazon could guide market sentiment and set the tone for S&P 500 and Nasdaq 100 trading.
XAG/USD Dips Amid Rising US Yields
Silver prices (XAG/USD) are witnessing a dip from their monthly peak of around $23.70 as the 10-year US Treasury yields surged to 5% in the New York trading session. The precious metal is hovering near $23.00 amidst an action-packed week. The surge in long-term US bond yields to levels unseen since 2007 is attributed to expectations that the Federal Reserve will sustain higher interest rates for an extended duration.
XAG/USD Daily Chart
GDP Growth Rate Expectations and Potential Interest Rate Hike
Analysts estimate a growth rate of 4.2%, a significant jump from the 2.1% recorded in Q2 (April-June). A positive US GDP report could fuel expectations of another interest rate hike by the Federal Reserve.
Anticipation of Preliminary S&P Global PMI Data
Before the GDP announcement, investors will be closely watching the release of the preliminary S&P Global PMI for October, scheduled for Tuesday at 13:45 GMT. Both the Manufacturing and Services PMI are projected to drop to 49.5 and 49.9, respectively.
Gold’s Steady Climb Pauses Near the $2000 Mark
Gold has begun to consolidate below a fresh five-month high, following a substantial uptrend that halted just shy of the significant $2000 psychological barrier on Monday.
XAUUSD Daily Chart
The strong resistance encountered around the $2000 zone on Friday suggests that traders are facing increased obstacles at this level, prompting them to realize some profits from the impressive over 7% rally witnessed over the previous two weeks.
Overextended daily indicators are also contributing to the current pause in momentum. However, the pullback has been relatively shallow thus far, indicating that bullish sentiments remain robust for a renewed push above the $2000 mark.
Middle East Unrest Fueling Demand for Safe-Haven Gold
The ongoing unrest in the Middle East is driving traders to seek safety, with escalating conflict risks boosting demand for the safe-haven asset, gold, thereby continuing to drive up its price.
Bullish Outlook for Gold Despite Current Pullback
Despite the current pullback, support was found just above the rising 5-day moving average ($1960). Extended dips are anticipated to remain above $1945 (the recently broken 50% retracement of the $2080/$1810 range), indicative of a healthy correction that keeps the broader bullish perspective intact.
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