Following our first market update this morning where we analyzed the main economic events on the schedule until Wednesday and their possible impact on the prices of respective currencies, we will take a look at what´s left on the economic calendar for the rest of the week.
- UK BOE Chairman Carney Speaks – Do you remember this guy the last time he spoke? He tried to attribute all the merits to the BOE (Bank of England) and particularly to himself when the UK economic data bounced back in August, after the horrible post post-Brexit numbers, as if a 0.25% rate cut would work miracles in a few weeks. Such a modest chap, isn´t he?
The same guy will appear live on Thursday. Wonder what his take will be on the Brexit fears which have resurfaced again. I´m quite sure he´ll blame the UK/EU politics and the markets for the recent negative sentiment in the GBP.
We never know for sure what´s going on in a central banker´s head, but after the British PM May pushed for a hard Brexit a couple of weeks ago and the renewed negative sentiment surrounding the UK, my take is that he will push for more rate hikes. We saw what happened to the GBP on no news at all, so if he takes the rate cut path again EUR/GBP might reach parity soon.
- US FED Chairwoman Speaks and Retail Sales – The FED made it clear in their last FOMC meeting that an interest rate hike is coming soon. They didn´t exactly say that, but if you base the rate hike on the employment then there´s little room for alteration. The market has already priced in a 60% chance of a December rate hike, but if you hear more of the same rhetoric as the last time, then get ready to buy the USD, particularly against the Pound.
But before we get there, the retail sales data will have its say. Both retail sales and core retail sales declined in the previous reading, but that didn´t stop the FED from delivering a hawkish statement. This time, the sales are expected to jump higher by 0.6% and 0.4% respectively. If the retail sales numbers are positive, then expect the USD to rally, particularly if they beat the expectations. On Friday morning we´ll come up with an exact plan how to trade the USD, because I´m sure there will be some implications with Yellen following the sales release a few hours later.