What’s up, traders.
The precious week proved to be very effective for the dollar as it edged toward a six-week high on the U.S. jobs data that traders believe will sprinkle light on how much longer the Fed’s aggressive rate-hiking cycle will continue. Besides that, the Fed Chairman Jerome Powell talked up the U.S. economy, asserting that the United States is on the edge of a “historically rare” period of ultra-low unemployment. In a sense, it extends sort of a hawkish tone from the Fed Chair.
It’s clear that the better labor market helps to improve the inflation goals and if the Federal Reserves don’t take measures now, it may turn inflation into hyperinflation. Which is why we can expect the Fed to come up with further rate hikes in 2018 and 2019. That spooked investors and caused U.S. Treasury yields and the Euro/dollar currency pair to breach key technical levels.
In the coming week, the US inflation stands out along with the UK’s GDP figures. Here’s what to expect…
Top 5 Economic Events Worth Watching This Week
Monday – Oct 08
On Monday, the global financial markets are expected to remain closed in the observance of Thanksgiving Day. Meanwhile, Japanese investors will be celebrating the Health-Sports Day and the US markets will be closed due to Columbus Day. Most of the forex brokers may remain open but the volatility is likely to remain extremely thin.
Tuesday – Oct 09
1) AUD – NAB Business Confidence
The National Australia Bank is due to release the business confidence figure at 12:30 (GMT). It’s a leading indicator of economic health – businesses react quickly to market conditions, and changes in their sentiment can be an early signal of future economic activity such as spending, hiring, and investment.
About 350 businesses are asked to rate the relative level of current business conditions. The business confidence data slipped from 7 to 4 in the month of September. Aussie is likely to gain support on a greater than 4 figure this month.
Wednesday – Oct 10
At 8:30 (GMT), the Office for National Statistics will be releasing the gross domestic product for the United Kingdom. It’s a report for the month of August, which provides more insights into Q3. In July, the UK economy grew surprisingly by 0.3% but is projected to slow to 0.1%. Any slowdown may be connected to concerns about Brexit.
The UK also prints Manufacturing Production and the Goods Trade Balance at the same time. The Manufacturing Production is expected to rise by 0.1% vs. a drop of -0.2% previously.
The producer’s price index is considered a leading indicator of consumer inflation. When producers charge extra for goods and services, the higher costs are usually passed on to the consumer. So, a higher PPI can lead to higher CPI, which pressures central banks to release hawkish monetary policies.
The current PPI figure is anticipated to grow by 0.2% m/m vs. a dip of -0.1% previously. It’s gonna underpin the dollar especially in the absence of major catalysts this week.
Thursday- Oct 11
4) EUR – ECB Monetary Policy Meeting Accounts
Recalling the recent policy meeting, the European Central Bank did not make any change to its policies. In fact, the ECB President Mario Draghi sort of acknowledged the economic slowdown and named it as a temporary factor.
The current meeting minutes will present a look into the discussions within the Governing Council. All we need to see is what they are expecting to do considering the recent worries over the economic slowdown.
Any remarks on tapering the QE (Quantitative program) and the next rate hike (which is expected next year in 2019) will help us drive the further trends in the Euro.
For all the newbies out there, it’s a change in the price of goods and services purchased by consumers, excluding food and energy.
Back in September, the US Consumer Price Index fell short of expectations with Core CPI shrinking to 2.2% after topping at 2.4% in July. A monthly gain of 0.2% was observed in the headline monthly number in August while Core CPI rose by only 0.1%.
This week, the core CPI and the headline CPI figure are forecast to advance by 0.2% in the monthly figure.
All the best and stay tuned to FX Leaders for exciting trade setups and forex trading signals. Have an awesome weekend.