The USD has been growing for the whole month including the past week. Stable and positive US macro-economic data is increasing investors’ expectations of the the interest rate hike in the United States. According to the futures market, probability of the rate hike in December is now 73.6% against 50% in the middle of last month.
On Friday, US Commerce Department issued information that with the adjustment for inflation and seasonal factors GDP has grown by 2.9% on annual basis against the forecast of + 2.5%, which has been the strongest growth for Q3 in the last 2 years.
Concern about slowing down of economic growth in the near future has weakened.
Strong economic statistics may give ground for the rate hike, which is likely to take place in December. As it is not expected that the US will take this measure before the presidential elections in the US scheduled for 8 November. The meeting of the US Fed is scheduled for November 1-2.
Statistics and macro-economic data of this week are as follows:
13:00 (GMT+3) – GDP of Eurozone in Q3 and preliminary European consumer price index for October. This important data may cause the increase in volatility in the Euro and European stock market.
15:30 – US personal income and personal consumption expenditures September.
16:45 – Fed Chicago PMI, showing economic activity in the States of Illinois, Indiana and Michigan. It is expected that the index will be at the level of 54.0.
17:30 – Fed Dallas index of business activity in the manufacturing sector for October.
01:30 - AiG activity index in the manufacturing sector of Australia for October.
04:00 - Business activity index in the Chinese manufacturing and the service sectors for October. Chinese economy is the second largest in the world after the USA. Therefore, Chinese macro-economic statistics will have a significant impact on the financial markets, and especially on the position of the Yuan and other Asian currencies, the USD and Chinese and Asian stock indices.
04:45 - Markit Economics Caixin index of purchasing managers (PMI) in the Chinese manufacturing sector for October. This index is a leading indicator of the development in the Chinese manufacturing sector, having a strong impact on global financial markets. Although economic growth in China is slowing down, the pace of growth is still quite impressive.
06:00 – Interest rate decision by the Bank of Japan and a press conference. Expectations that the rate will be lowered and reach a negative value and the asset purchase program will be expanded are 50/50. Such decision will cause a sharp decline in the Yen in the currency market, and the rise in the Japanese stock market.
If the Bank of Japan does not take such a decision, the Yen will continue to rise in the foreign exchange market. After the meeting of the Bank of Japan the head of the Bank Mr. Kuroda will shed light on the current economic situation in Japan and future prospects of the monetary policy. Despite the earlier efforts undertaken by the Bank in order to stimulate Japanese economy, inflation remains low, production and consumption are falling and the price of the Yen is increasing, which have a negative impact on the Japanese manufacturers, who are focused on exports. The market is mixed. Earlier Mr. Kurodahas repeatedly stated that the Bank is prepared to take the most drastic measures if the need be. Volatility during this period will increase not only in the Yen but across in the Asian and global financial markets.
06:30 – Interest rate decision by the RBA. Currently the interest rate is at the level of 1.5%. In the comments after the meeting the RBA will explain its rate decision and underline future prospects for the monetary policy. If the RBA shows hawkish attitude, markets will interpret it as the probability of the rate hike at the next meeting, which is a positive factor for AUD.
11:15 – Volume of the retail trade in Switzerland for October on the annual terms. A month ago the index was at the level of 3.0%.
15:30 – Canadian GDP for August.
16:30 - RBC index of business activity in the manufacturing sector of Canada. A result above 50 shows efficiency in the sector and causes the rise in the CAD.
17:00 – 18:00 - important US macro-economic statistics for October including ISM index of gradual acceleration of inflation, with the forecast of 54, ISM index of business activity in the manufacturing sector with the forecast of 51.5.
After 18:00 – Price index for dairy products in New Zealand. The auction of dairy products which took place two weeks ago showed slight increase in world prices for dairy products. Global Dairy Trade price index for dairy products was at the level of 1.4%. The main item of the country's exports is the milk powder. The decline in the price of dairy products will add pressure on the New Zealand dollar.
23:30 – Report of the American Petroleum Institute (API) on changes to the US oil stocks for the last week.
00:45 – New Zealand’s labour market for Q3.
11:55 – Unemployment rate in Germany. Markit index of business activity in the German manufacturing sector for October.
12:00 – Markit index of business activity in the manufacturing sector of Eurozone in October.
12:30 – British index of business activity in the construction sector in October.
15:15 – ADP unemployment rate in the US private sector in October. This index does not have a direct correlation with Non-Farm Payrolls, but as a rule it has a strong impact on the market and the USD. A month ago this index was at the level of 154 000.
21:00 – Interest rate decision by the US Fed. Probability of the rate hike from the current level of 0.5% is low before the Presidential election. Probability of the rate hike in December is 70%, which will be a positive factor for the USD till the end of this year.
03:30 – Australian foreign trade balance.
04:45 – Caixin (PMI) purchasing manager index in the Chinese service sector in October from Markit Economics. A month ago the index was at the level of 52.
09:45 – SECO consumer confidence index in Q4, which assesses inflation in Switzerland. Level of this index is a positive factor for the Swiss franc.
12:00 – economic Bulletin of the ECB, which is usually released two weeks after the meeting of the Board of Governors.
13:00 – inflation report of the Bank of England. This report, along with the GDP, has strong effect on the monetary policy of the Bank of England. The report can have a strong impact on the price of the British pound and the UK stock market.
13:00 – Unemployment rate in Eurozone in September.
15:00 – Interest rate decision by the Bank of England. It is likely that the rate will remain at the current level of 0.25%.
At the same time the following data will be released: monetary policy report with the results of the rate voting and the other issues and comments on the country’ economy; Minutes of the MPC meeting with results of rate voting. The main risk to the UK after Brexit is the possibility of slowing down of economic growth in the country, and the deficit of the current account of the payment balance On the other hand, the UK has stayed afloat after the Brexit. So it is not clear what will be further actions of the Bank of England.
15:30 – A speech by the head of the Bank of England Mark Carney, who may clarify further policy of the Bank of England. Volatility in the Pound and in the index FTSE100 of the London stock exchange usually increases.
15:30 – US labor market data for the last week. The number of initial applications for unemployment benefits in the U.S. last week. Previous index was at the level of 258 000.
16:45 – Markit index of business activity in the US service sector for October.
17:00 – ISM index of business activity in the US service sector for October.
18:00 – Industrial orders in the U.S. in September.
04:30 – RBA monetary policy comments. Volatility in the Australian dollar may increase.
12:00 – Markit index of business activity in the manufacturing and service in Eurozone for October
(Markit Economics purchasing manager index (PMI)). PMI is an important indicator of business conditions and general state of the economy in Eurozone. If the index exceeds the level of 50, it will be a positive factor for EUR.
13:00 – Producer price index in Eurozone in September.
15:30 – US monthly data on the labor market for October, including Non-Farm PayRolls (156 000 in September) and unemployment rate (previous index was at the level of 5.0%), average hourly wage (+0.2% in September). Labour data along with the GDP and inflation data has a strong impact on the future plans for monetary policy in the United States. Volatility in the market will sharply increase during this period.
15:30 – important Canadian macro-economic data, including foreign trade balance for September, employment and unemployment rate in Canada for October.
17:00 – Business activity index in Canada for October.
20:00 – report on the number of active drilling rigs the USA from the oilfield services company Baker Hughes. This report is an important indicator of the state of the US oil sector, which has a significant impact on the oil prices. Currently, the number of the active rigs is 44.