Next week, markets will continue to assimilate the results of the latest central bank meetings. In addition, market participants will closely monitor the release of economic data, with particular attention to the Eurozone inflation figures and the US underlying personal consumption expenditure (PCE) index.
Here’s what you need to know for next week:
The Dollar Index recorded its tenth consecutive weekly rise and ended around 105.50 points. The DXY maintains its bullish trend, supported by US economic data and the recent Federal Reserve (Fed) meeting.
During the FOMC meeting, interest rates remained unchanged in the range of 5.25% to 5.50%. Regarding macroeconomic forecasts, most members continue to see the possibility of further rate hikes this year. US economic data was mixed, with housing data weaker while jobless claims fell to the lowest level since January.
Next week, attention will focus on Friday’s release of the Fed’s preferred measure of consumer inflation, the core personal consumption expenditure (PCE) price index. A decrease in the annual rate is expected from 4.2% to 3.9%. The third estimate of second quarter GDP will be published on Thursday.
The Japanese Yen was one of the currencies with the worst performance. The Bank of Japan left its monetary policy unchanged at its September meeting, with Governor Ueda stating that any changes would only come when 2% inflation was in sight. Japan will publish several economic indicators next Friday, including the Tokyo Consumer Price Index, unemployment rate, Industrial Production, retail sales, Consumer Confidence and consumer spending in August. However, attention will remain focused on the possible intervention of the Japanese authorities to curb the weakness of the yen. The USD/JPY pair hit its highest level in decades above 148.00, supported by rising US yields and the Bank of Japan’s policy stance.
The British pound lagged following the Bank of England’s decision to keep interest rates unchanged after a slowdown in inflation in August. Next Friday, the United Kingdom will publish a new estimate of GDP growth in the second quarter. The GBP/USD pair retreated for the third consecutive week, hitting its lowest level since March at 1.2232, before closing around 1.2260. The pair has strong support around 1.2200. The EUR/GBP pair rose from 0.8600 to 0.8700, marking its biggest weekly advance since February.
The EUR/USD pair finished the week near 1.0650, after hitting new monthly lows at 1.0614. The Eurozone PMI provided some relief with a rebound on Friday. Inflation data will be crucial next week, with Spain and Germany kicking things off with CPI on Thursday, followed by France, Italy and the Eurozone on Friday.
The Swiss franc lost ground against major currencies after the Swiss National Bank (SNB) left its official interest rate unchanged at 1.75%. The Swiss franc was also influenced by the dovish stance of the European Central Bank. USD/CHF accelerated higher and broke above 0.9000, reaching its highest level since June. EUR/CHF went from 0.9550 to 0.9660.
The AUD/USD pair continued to trade within a range between 0.6500 and 0.6350. Australia will release the monthly Consumer Price Index on Wednesday, with the annual rate expected to rebound from 4.9% in July to 5.2% in August. Retail sales data will be released on Thursday.
The New Zealand Dollar was the best performing major currency during the week. The NZD/USD pair rose almost 1% to 0.5975 but failed to regain the 0.6000 level.
In a volatile week for the metals market, Gold ended the week sideways around $1,925 after regaining ground on Friday. Silver remained above $23.00 and closed around $23.50.
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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.
