- Prelim October private sector PMIs to set the tone on Tuesday.
- ECB interest rate decision and press conference key for the EUR/USD on Thursday.
- On Friday, US inflation, personal spending, and consumer sentiment wrap up a busy week.
For the Dollar:
Private US sector PMI numbers for October will garner investor interest on Tuesday. The markets will see how the US economy performs at the start of Q4.
Service sector activity will be the focal point, contributing more than 75% to the US economy. Beyond the headline PMI, investors must consider the sub-components, including prices, employment, and new orders. Economists forecast the Services PMI to fall from 50.1 to 49.8.
On Thursday, GDP numbers for Q3 will influence investor appetite for the US dollar. Better-than-expected services PMI and GDP numbers may fuel bets on a Fed interest rate hike. However, jobless claims also need consideration. Labor market conditions remain a factor for Fed interest rate decisions.
Inflation, personal spending, and consumer sentiment figures will wrap up a busy week. Sticky inflation, and upbeat spending and sentiment numbers will likely fuel demand for the US dollar.
Away from the economic indicators, FED commentary also warrants consideration. Fed Chair Powell is on the economic calendar to speak on Thursday.
For the EUR:
On Tuesday, consumer sentiment figures from German and prelim private sector PMIs for the euro area will influence the appetite for the EUR/USD. The German, French, and Eurozone Services PMI will likely have more impact on the EUR.
A deterioration in service sector activity would reinforce market expectations of a Eurozone recession. The services sector accounts for more than 70% of the Eurozone economy. Economists forecast the Eurozone Services PMI to fall from 48.7 to 48.6.
German business sentiment figures will need consideration on Wednesday. However, the influence of the numbers may hinge on the PMI numbers.
On Friday, French GDP numbers for Q3 also warrant consideration. An unexpected contraction in the French economy would pressure the EUR/USD.
Beyond the economic indicators, the ECB will be in the spotlight on Thursday. The ECB interest rate decision and press conference will move the dial. Economists expect the ECB to leave interest rates unchanged at 4.5%. Barring a surprise, ECB President Lagarde will guide the EUR/USD.
For the Pound:
The UK labor market and the private sector will be in the spotlight. It could prove to be a choppy Tuesday session for the Pound.
The delayed labor market overview report will garner investor interest early in the session. After softer-than-expected wage growth, claimant counts and the UK unemployment rate need consideration. A larger-than-expected rise in claims and an increase in the unemployment rate would pressure the Pound.
However, private sector PMI numbers for October also need consideration. The Services Sector PMI will have more influence, accounting for over 70% of the UK economy. Economists forecast the Services PMI to rise from 49.3 to 49.8.
Beyond the numbers, BoE Monetary Policy Committee member Sir Jon Cunliffe is on the calendar to speak on Thursday.
For the Loonie:
The Bank of Canada will impact the buyer appetite for the Loonie on Wednesday. Economists forecast a 25-basis point interest rate hike to 5.25%. Barring a surprise, the markets will focus on the accompanying statements and press conference. A dovish rate hike may weigh on investor appetite for the Canadian dollar.
Beyond the numbers, market risk sentiment and the influence on crude oil prices will also move the dial.
Out of Asia:
For the Aussie Dollar:
The Aussie dollar will be in the hands of the private sector PMIs and the RBA on Tuesday. After the unexpectedly hawkish RBA Meeting Minutes, RBA Assistant Governor Michelle Bullock speaks on Tuesday. Support for an RBA rate hike would fuel demand for the Aussie dollar. Weaker-than-expected private sector PMIs for October may curb hawkish RBA chatter.
However, Q3 inflation numbers will likely have more influence on the Australian dollar. Economists forecast the annual inflation rate to soften from 6.00% to 5.30%, signaling sticky inflation. A higher-than-expected inflation rate would fuel bets on an RBA rate hike.
On Friday, producer prices for Q3 will also need consideration. An uptrend in producer prices would suggest resilient demand-driven inflationary pressures. Significantly, an uptrend may also translate into a pickup in consumer prices.
For the Kiwi Dollar:
There are no economic indicators from New Zealand to influence the appetite for the Kiwi dollar. The lack of economic indicators will leave the Kiwi dollar in the hands of market risk sentiment. News updates from the Middle East will impact the appetite for the commodity currencies.
For the Japanese Yen:
Private sector PMIs and inflation will move the Japanese Yen this week. On Tuesday, prelim private sector PMIs for October need consideration. The Services PMI will likely have more influence on the appetite for the Yen. Japan’s services sector accounts for over 70% of the Japanese economy. Economists forecast the Services PMI to decline from 53.8 to 52.9.
On Friday, inflation will be in the spotlight again. Hotter-than-expected inflation figures would pressure the Bank of Japan to exit negative rates. The markets also expect further tweaks to the Yield Curve Control policy.
Economists forecast the annual inflation rate for Tokyo to soften from 2.5% to 2.3% in October. National inflation eased from 3.2% to 3.0% in September, with core inflation falling below 3.0% for the first time since August 2022.
Out of China
Industrial profits will be in the spotlight on Friday. Recent economic indicators from China suggest an improving macroeconomic environment. A less marked decline in industrial profits would support views that stimulus measures are taking effect.
Economists forecast industrial profits to decline by 9.0% from January to September compared with the same period one year earlier. In August, industrial profits were down 11.7%.
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