USD

Treasury yields are pushing the dollar up. 10 Year Treasury yields are trading near the highest levels since March, 2011. 

Currently, FED fund rates have priced in a 74.6% chance of a rate hike. This probability is expected to grow more in the next month as long as the FED continues with its monetary policies and rhetoric. Rate hike expectations should provide some backing to the dollar.Individual stocks and indices encountered losses the previous Wednesday when President Trump remarked that FED policy is too aggressive. This may end up politicizing FED and halt or slow down their rate hike rhetoric. President Trump characterized drops in stocks as a correction.Markets have completely shifted focus to wages and inflation, so this Tuesday’s Core PCE will be carefully observed for determining the future course of the USD and FED monetary policy in general. CPI data on previous the Thursday came at 2.3% YoY vs 2.4% YoY expected.This week we wait for data concerning consumption, inflation, building permits and oil stock change. The Fed prefers PCE as an indicator of its success in managing inflation as the Core PCE is considerably less volatile than the CPI measure of inflation.Key events for USD:

Monday:

Retail Sales (MoM)               

Retail Sales ex Autos (MoM)

Tuesday:

Core Personal Consumption Expenditures (QoQ)

Wednesday:

Building Permits (MoM)                     

Building Permits Change                    

EIA Crude Oil Stocks change USD

EUR

Main concerns in the Euro zone surround the Italian budget. The deadline for presenting the budget is October 15th. The Italian government pushes for 2.4% budget deficit and takes a firm stand. It is unlikely that the EU will accept the Italian budget although the Italian government may reduce the 2020 and 2021 budget deficit targets to below 2.2% and 2.0% respectively. Additionally, the S&P will deliver its decision about rating of Italian bonds on 26 October while Moody’s plans to do it by the end of October. A downgrade in rating of Italian bonds will have a negative impact on the value of the EUR.The German government has reduced its 2018 growth forecast to 1.8%, down from 2.3%. Its 2019 growth forecast will be cut to 1.8% from 2.1% and 2020 growth is expected to come in at 1.8%, with2018 inflation seen at 1.8%, 2019 inflation at 2.0% and 2020 inflation at 1.9%This week we will have data surrounding investor optimism and inflation.Key events for EUR:

Tuesday:

ZEW Survey – Economic Sentiment Link (EUR/GER)

Wednesday:

EU Brexit Summit 

Consumer Price Index (YoY) 

Consumer Price Index – Core (YoY)

Thursday:

EU Brexit Summit

GBP

Recent talks about striking an agreement between Britain and EU officials have been positive and thus optimism towards a Brexit deal prevails in the markets. During the EU Brexit Summit on October 17-18, both parties will look towards making a deal by the end of November. This is giving the pound a nice boost as it continues to strengthen across the markets. Even if there is no substantial progress made during the Summit, the pound will still be underpinned. The key risk for the pound is within the UK, and its concerns of whether Theresa May can win over enough parliamentary votes for her Brexit proposals.BOE chief economist Andy Haldane has reiterated that the BOE is on course for one rate hike per year. This course will be maintained as long as the Brexit situation remains stable.This week we will see data about inflation in the UK, consumption as well as wage growth.Key events for GBP:

Tuesday:

Average Earnings including Bonus (3Mo/Yr)                

Average Earnings excluding Bonus (3Mo/Yr)

Wednesday:

EU Brexit Summit                     

Consumer Price Index (YoY)                     

Core Consumer Price Index (YoY)

Thursday: 

EU Brexit Summit                  

Retail Sales (MoM)                  

Retail Sales (YoY) GBP

AUD

Fears of US- China trade war wage on AUD as China is Australia’s leading trading partner. News about US- China relations can have impact on AUD. Additionally data from China regarding the Chinese economy will have impact on AUD.Reserve Bank of Australia Deputy Head of Economic Analysis Department, Merylin Coombs stated that they expect GDP growth in the next year to be slightly above 3% and that tightening of the labour market will produce growth in wages and inflation.This week’s RBA Meeting’s Minutes will show us more information aboutthe course of the RBA’s monetary policy, data regarding Unemployment in Australia and GDP data from China.Key events for AUD:

Tuesday:

RBA Meeting’s Minutes

Thursday:

Employment change                 

Participation Rate                 

Unemployment Rate

Friday:

GDP (MoM) (Chinese GDP)             

GDP (YoY) (Chinese GDP)

NZD

The Reserve Bank of New Zealand have left the official cash rate (OCR) at 1.75%, as expected, and have issued no change for monetary policy. In a brief press statement accompanying the OCR  decision (Official Cash Rate), it was stated that they expect to keep the OCR unchanged into 2020, that Employment is around a sustainable level, that consumer price inflation remains below the 2 percent mid-point of their target and that lower the New Zealand dollar exchange rate is expected to support demand for exports.This week we will have data concerning inflation in New Zealand as well as the GDT Price Index, which will show changes in price of Dairy, New Zealand’s top export.Key events for NZD:

Monday:

Consumer Price Index (QoQ)               

Consumer Price Index (YoY)

Tuesday:

GDT Price Index

CAD

In the past week CAD has experienced positive effects after the signing of USMCA deal. CAD was stronger across the markets, however falling oil prices have hampered loonie. Oil is Canadas largest export and as such CAD is very sensitive to changes in oil prices.This week we will get data about consumption in Canada as well as inflation.Key events for CAD:

Friday:

Retail Sales (MoM)             

Retail Sales ex Autos (MoM)             

Bank of Canada Consumer Price Index Core (YoY)

JPY

Risk off sentiment that is currently prevailing in the markets can shift focus on JPY which is traditionally considered as a risk aversion currency. Higher yields and trade tensions have caused stock markets to close lower in the previous week, which in turn increased the attractiveness of JPY.This week we will get data about Exports, Imports and Trade Balance as well as data about inflation.Key events for JPY:

Thursday:

Exports (YoY)                   

Imports (YoY)                   

Merchandise Trade Balance Total

Friday:

National Consumer Price Index (YoY)              

National CPI Ex Food, Energy (YoY)

CHF

This week we will see data surrounding Exports, Imports and Trade BalanceKey events for CHF:

Thursday:

Imports (MoM)                  

Exports (MoM)                  

Trade Balance CHF

You can follow all economic events on the Economic Calendar page on our Website. MT4 server time is set to GMT + 3 and if you need assistance converting MT4 server time to your local time you can use some of the online time converters such as WorldTimeBuddy.

Please note that this analysis should not be used as investing advice as it is only an overview of the economic events influencing the markets.Please remember that MT4.VAR. and MT4.ECN. accounts have Market Execution. Please note how Execution works during high impact news and other times of low liquidity.