We have a busy week ahead. Not only is the FOMC meeting scheduled, but the Bank of England and the Bank of Japan will also hold monetary policy meetings. Eurozone inflation data and employment figures from the United States, New Zealand and Canada will also be published. In addition, the ISM services report in the United States and the Chinese PMIs will be published. Geopolitical developments will also continue to be a key factor. Investors will continue to digest corporate earnings results.
Here’s what you need to know for next week:
The Dollar Index rebounds from one-month lows and posts weekly gains, trading around 106.50 and holding near year-to-date highs. The Dollar recovery is regaining momentum, with a critical resistance level around the 107.00 area. US economic data remains crucial for the Dollar. This week, third-quarter US GDP data beat expectations, showing economic acceleration at the fastest pace since mid-2021.
Next week, the Federal Reserve (Fed) will announce its monetary policy decision. Market expectations suggest there will be no change in policy despite the robust economy and tight labor market, as inflation slows but remains above target. In economic data, the focus will be on employment numbers, such as Wednesday’s ADP Private Employment report, Thursday’s Jobless Claims and Friday’s Nonfarm Payrolls. Also important will be the employment cost index, whose publication is scheduled for Tuesday, one day before the FOMC decision.
Despite the decline in Treasury yields, the DXY posted weekly gains. Strong US economic data and risk aversion supported the dollar. Wall Street’s main indexes posted their lowest weekly close in months on corporate earnings, geopolitical risks, expectations of higher interest rates for longer and a bleak global economic outlook.
The Central Bank European Central Bank (ECB) held interest rates steady, and market consensus suggests it has ended rate hikes. The ECB ended a streak of ten consecutive rate hikes due to slowing inflation and amid growing economic uncertainty, with the Eurozone on the verge of recession.
The Euro ended the week lower against the Dollar, retreating from the monthly highs reached on Tuesday. He EUR/USD pair found resistance at 1.0690, the confluence of the 55-week and 100-week simple moving averages (SMA), and retreated. The pair managed to avoid a close below 1.0500, which would indicate further weakness.
Eurozone inflation data will be published next week, with preliminary figures for October. It will be crucial for market expectations and also for the ECB’s prospects. A rebound in inflation could change the perception of the central bank, but it would not necessarily boost the euro. The region’s overall Consumer Price Index (CPI) is expected to fall to 3.1% from 4.4%.
The Bank of Japan will announce its monetary policy decision on Tuesday. There could be news about an increase in the 10-year yield limit. The absence of changes in monetary policy could affect the Japanese yen, which could increase fears of intervention by the Japanese authorities to curb the weakness of the yen. Market participants will also closely analyze the BOJ’s updated macroeconomic forecasts. He USD/JPY retreated sharply on Friday and ended the week in negative territory below 150.00.
GBP/USD failed to maintain the gains and ended the week with losses, posting the lowest weekly close since March. However, the pair avoided making new year-to-date lows and remained above 1.2100. The Bank of England (BoE) will hold its monetary policy meeting, in which the consensus expects no changes.
TD Securities analysts weigh in on the BOE:
There have been virtually no signs of strength in the latest data, so we expect a comfortable 8-1 in favor of holding. On the other hand, forward guidance is likely to be softened somewhat in light of the weaker economic outlook, indicating a fairly high bar for further hikes.
Next week, Chinese data, including the Purchasing Managers’ Index (PMI), will be important for market sentiment and in particular for Antipodean currencies, which remain under pressure and are trading near monthly lows due to the strength of the US dollar, geopolitical factors and the global outlook.
The AUD/USD pair It hit one-year lows, but quickly rebounded into a known range between 0.6280 and 0.6400. The overall trend is bearish, but a daily close above 0.6400 could indicate a more sustainable rebound.
Australia will report retail sales data next week. Market participants believe the Reserve Bank of Australia (RBA) could raise interest rates at its meeting on November 7, following the latest round of inflation data. The Australian Dollar was the best performing G10 currency during the week, driven by these expectations.
The Canadian dollar was the weakest currency. USD/CAD rose for the fourth consecutive week and recorded its highest close since October 2022, above 1.3850. Canada will publish employment data next Friday.
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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.
