Week Ahead: Trading Outlook

Key Events This Week Ahead Trading Outlook – October 26th – October 30th

Mon: EUR – German IFO (business climate, current assessment & business expectations), USD – New Home Sales, NZD – Trade Balance, CNY – Industrial Profits
Tue: GBP – GDP, USD – Consumer Confidence, Durable Goods, Composite & Services PMIs, JPY – Retail Trade
Wed: CNY – Leading Index, EUR– German Retail Sales, AUD – CPI, USD – Advance Goods, FOMC Rate Decision, NZD – RBNZ Rate Decision, JPY – Industrial Production
Thur: EUR – EC Economic Forecasts, German Unemployment Rate, German CPI, GBP – Net Consumer Credit, Net Lending, Mortgage Approvals, CBI Reported Sales, USD – GDP, PCE, JPY – CPI
Fri: JPY – BOJ Policy Statement & Kuroda Press Conference, EUR – EuroZone CPI, CAD – GDP, USD – University Of Michigan Consumer Confidence Survey

Overview

  • USD Sharply higher in the wake of the extremely Dovish October ECB meeting. Market otherwise quiet ahead of the upcoming FOMC meeting though a rate hike is priced only with the slimmest of chances. Outside of the FOMC rate decision, data focus this week turns to Advance Goods, Consumer Confidence, GDP & PCE data though reactions may be muted in the wake of the rate decision.
  • EUR It seems as though markets were taken aback by the heavily Dovish tone of the ECB meeting with EURUSD tanking by over 300 pips as retail markets bought increasingly into the decline. News that the ECB is once again considering negative interest rates has turned sentiment firmly bearish on the single currency. Traders will focus on EuroZone CPI released this week to see if the EuroZone has moved back into positive territory
  • GBP Data flow was positive for Sterling this week as Public Sector Borrowing unexpectedly contracted to £8.6bln from £9.6bln and retail sales for September displayed a convincing beat of 5.9% vs 4.7% expected. Despite the positive data sets GBPUSD drifted lower over the week as the US Dollar strengthened. Following last month’s surprise beats in lending data, traders will look to see if momentum can be sustained this month or not. Attention to will be on GBP GDP on Tuesday
  • JPY Japanese manufacturing PMIs for September were unexpectedly stronger at 52.5 vs 50.5 expected. Despite this better data, JPY traded lower over the week with investor expectations growing for further BOJ easing at their upcoming meeting on Friday. Ahead of the BOJ statement we also have JPY CPI.
  • AUD A much quieter week for the Australian Dollar last week, as price remains range-bound at recent highs against the Dollar. Risk sentiment has been tentative this week with commodities remaining soft. An absence of domestic data saw price mainly driven by USD flows. Domestic data focus this week will be on CPI data Wednesday whilst traders will also keep an eye on the RBNZ rate decision on Wednesday night for any potential cross-flow impact on the Aussie’s trading outlook.
  • CAD The Canadian Dollar was lower following the Bank Of Canada’s downward revision to growth. Canadian CPI on Friday came in just below expectations at 1.00% leading the CAD lower into the week-end. Traders will now look ahead to Fridays GDP print.
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