During the Asian session, trade data from New Zealand and the national Consumer Price Index from Japan are expected. Markets expect China to keep its lending rates unchanged. UK retail sales figures and the German Producer Price Index will be released later. Although there are speeches from Fed officials scheduled, it appears there might not be much additional impact after Powell’s speech on Thursday.
Here’s what you need to know on Friday, October 20:
In the week ending October 14, initial jobless claims fell to 198,000, the lowest level since January, indicating that the labor market remains tight. However, Continuation Applications increased to 1.734 million in the week ended October 7, the highest level since July. Existing home sales saw a smaller-than-expected decline, but still hit the lowest level in 13 years.
Federal Reserve (Fed) Chairman Jerome Powell suggested that the central bank will not raise rates in the short term. However, he explained that further tightening of monetary policy could be warranted if there is more evidence of above-trend growth or if the labor market stops easing. Powell also mentioned that the risk remains inflation.
Despite the three consecutive declines in US stocks, the Dollar fell during the American session. The Dollar Index (DXY) consolidated losses following Powell’s remarks, but remained above 106.00. The bond market remains volatile, with the 10-year Treasury yield settling at 4.99%, the highest since 2007, while the 2-year yield fell from 5.26% to 5.16%. Geopolitical tensions continue to weigh on market sentiment, with Israel preparing for a ground invasion of Gaza. US President Biden is scheduled to address the nation late Thursday.
China is expected to keep 1-year and 5-year prime lending rates unchanged at 3.45% and 4.20%, respectively. No top-level report will be published in the United States. Fed officials Logan, Mester and Harker are scheduled to speak, but are not expected to offer any surprises.
The EUR/USD pair traded above 1.0600, but then retreated. The short-term trend is bullish, but the Euro faces increasing resistance between 1.0630 and 1.0650. Germany will publish the Producer Price Index (PPI) for September, and the annual rate is expected to move into negative territory, from -12.6% to -14.2%.
USD/JPY continues to trade near the 150.00 area, raising expectations for intervention. Japan will publish the national Consumer Price Index (CPI) for September.
Commerzbank JPY analysts:
In our baseline scenario, the yen appreciates moderately again thanks to our Fed rate cut scenario. However, the biggest risk to this scenario is not a sharper appreciation of the yen, but rather a very significant depreciation of the yen if The intervention strategy of the Ministry of Finance fails.
GBP/USD ended the day sideways, around 1.2140, after hitting a weekly low at 1.2089 and then bouncing towards 1.2200. On Friday, the UK will report on September retail sales and public sector net borrowing.
The NZD/USD pair bottomed at 0.5814, the lowest level since November 2022, but managed to trim losses, rising to 0.5850. The overall trend remains bearish, although Thursday’s bounce offers some hope to the bulls. New Zealand to publish September trade data.
USD/CAD saw a modest rise and ended around 1.3720. Canada is expected to report a 0.3% decline in August retail sales on Friday.
AUD/USD trimmed its losses during the American session, supported by a weaker US Dollar, and rose to 0.6340. The pair managed to hold above the key support zone of 0.6285.
Gold experienced (another) jump and reached $1,977, its highest level since late July. The precious metal continues to shine despite rising government bond yields. The next relevant resistance zone is seen at $1,985; Above it, a move beyond $2,000 seems likely. Silver rebounded during the American session, rising to $23.00.
Did you like this article? Help us with your comments by answering this survey:
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
