Week Ahead: Trading Outlook

After the wild swings seen in markets last week lets take a moment to quickly get you up to speed with whats in store for the upcoming sessions this week.

Sentiment remains bearish on EUR, especially against USD and JPY, since inflation expectations continue to fall, economic data from Germany is coming in weaker and the ECB continues to remain accommodative, beginning asset purchases in the coming weeks.

A stronger USD and falling commodity prices have contributed to a decline in inflation expectations in the US Falling inflation and inflation expectations is a global phenomenon and the UK and China recently reported sharp declines in CPI inflation.This week, US CPI may follow that trend, slipping on a headline basis as energy prices weigh on the index. Core prices, which are less sensitive to falling commodity prices, are notable as well.

GBP has continued to come under selling pressure as markets pushed back the first rate hike from the BoE. Inflation disappointed, coming in at 1.2%Y. This is much below the BoE’s 2%Y target and, while wages are rising, they are at historically low levels. Both these facts suggest to the markets that the BoE may keep rates low for a bit longer.

Several RBA speakers are scheduled this week and the RBA releases policy meeting minutes this week. Market participants will be keen on any commentary on the value of the AUD.

The Bank of Canada will update its forecast at its next policy meeting in October. Rising global growth concerns and falling commodity prices, oil in particular, gives the Bank of Canada plenty of scope to remain dovish at their meeting this week which should signal further CAD downside.

Further deterioration of risk appetite could be a near-term supporting factor for JPY. The markets views JPY weakness as no longer in the interest of the Japanese authorities, who worry that falling real disposable income growth may undermine Japan’s recovery.

Monday:

  • No significant data releases

Tuesday:

  • RBA OCT Minutes
  • Chinese Retail Sales, Industrial Production & GDP
  • UK Public Sector net borrowing
  • US Existing Home Sales (SEP)
  • JPY Merchandise Trade Imports/exports

Wednesday:

  • AUD CPI
  • GBP BoE Minutes
  • US CPI
  • CAD BoC Rate Decision
  • NZD CPI
  • JPY Japan Buying Of Foreign Bonds

Thursday:

  • NCY HSBC Manufacturing PMI
  • EUR Germany & EuroZone Manufacturng PMI
  • UK Retail Sales
  • USD Initial Jobless & Continuing claims
  • EUR EuroZone Consumer Confidence
  • NZD Trade Balance

Friday:

  • EUR German Consumder Confidence
  • UK GDP
  • USD New Home Sales

For full details on these data releases and all others please see our Economic Calendar. And for what to expect from our Trader Lifestyle section this week, head to Week Ahead: Trader Lifestyle.

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