Next week is expected to be quiet in terms of economic data for the US after a grueling week of releases. Thursday’s weekly Jobless Claims and Friday’s University of Michigan Consumer Sentiment Survey are the highlights of the week. The consumer price index is scheduled to be published in the following week. RBA to meet and China to release inflation data.
Here’s what you need to know for next week:
The US dollar posted its worst weekly performance in months after the Federal Open Market Committee (FOMC) meeting and the Nonfarm Payroll report. The Fed kept interest rates as expected and Nonfarm Payrolls rose by 150,000, below market expectations but still suggesting a healthy labor market.
US Jobs data missed expectations, suggesting a more balanced market and adding to growing expectations that the Federal Reserve (Fed) is done raising rates. This has increased willingness to take risks on Wall Street and weighed the US dollar. However, there could still be corrections and potential further declines, especially if US Treasury yields continue to decline. However, fundamentals still favor the US dollar as US economic growth outpaces other economies.
Next week, the economic calendar is quiet in terms of US data. The most relevant news will be weekly Jobless Claims and Friday’s University of Michigan consumer sentiment survey. Then attention turns to Consumer Price Index (CPI), due Nov. 14, which is key for Fed officials and market expectations.
Geopolitical events will have an important impact next week as well. Chinese inflation data due on Thursday will be closely watched.
EUR/USD it rose more than 150 pips during the week, supported by a weaker US dollar, and broke above the 55-day simple moving average (SMA) on Friday. The economic outlook for the Eurozone remains complicated. Next week, Eurostat will release September’s producer price index on Tuesday and retail sales data on Wednesday.
The Bank of England’s monetary policy committee voted 6-3 to leave the cash rate unchanged at 5.25%, as expected. GBP/USD on Friday it jumped to 1.2400 and hit monthly highs, while EUR/GBP decisively broke below 0.8700 and fell to 0.8665, the lowest level in two weeks. The UK will release third-quarter gross domestic product data on Friday, as well as industrial production and trade data.
USD/JPY fell for a third day in a row on Friday, amid lower Treasury yields. The weekly chart shows a reversal that could foreshadow further weakness. The pair recorded its lowest weekly close in a month, below 149.50. The Bank of Japan will release its summary of views on Thursday, including projections for inflation and economic growth.
USD/CAD it fell sharply from annual highs near 1.3900 to 1.3650 on Thursday and Friday. The sharp turnaround came amid risk appetite and was driven by a weaker US dollar. The Bank of Canada will publish the minutes of its latest monetary policy meeting on Wednesday.
AUD/USD it bounced off monthly lows to a multi-week high and broke through the key resistance area around 0.6500. The pair closed the week above the 20-week SMA. The Reserve Bank of Australia (RBA) will announce its monetary policy decision on Tuesday. Market expectations are leaning towards a rate hike. Some analysts expect a rate hike of 25 basis points, while others expect no change. The RBA could resume its tightening cycle after leaving the cash rate unchanged at 4.10% for four consecutive sessions. A rebound in inflation has firmly put a rate hike back on the table.
NZD/USD it surged and approached the 0.6000 mark and the 20-week SMA. The short-term bias has changed dramatically and now the pair looks set to rise further. The Reserve Bank of New Zealand (RBNZ) will release a report on inflation expectations for the fourth quarter on Wednesday.
Gold it broke $2,000 on Friday but failed to hold above the level. The risk outlook appears to be tilted to the upside, but the yellow metal faces strong resistance. silver it soared from $22.65 to $23.20 on Friday, just enough to erase the week’s losses.
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