Forecasting the upcoming week: Major central bank decisions will rule the sentiment

The US Dollar (USD) closed the week slightly higher, navigating a subdued market backdrop marked by stalled negotiations to end the US federal government shutdown, fading momentum in the US-China trade dispute, and lingering geopolitical tensions centred on the Russia-Ukraine conflict.

The US Dollar Index (DXY) has moved into a consolidative theme in the latter part of the week, setting aside an auspicious start while briefly surpassing the key 99.00 barrier. In the meantime, the current federal government shutdown remains in place, undermining the release of US data. The Dallas Fed Manufacturing Index is due on October 27, while the API’s weekly report on US crude oil inventories is expected on October 28 alongside the Conference Board’s Consumer Confidence gauge and the S&P/Case-Shiller Home Price index. The usual weekly MBA Mortgage Applications are due on October 29, prior to the EIA’s weekly report on US crude oil stockpiles. The Chicago PMI will wrap up the calendar on October 31.

EUR/USD retreated modestly on a weekly basis, reversing the prior advance in response to the decent improvement in the sentiment surrounding the Greenback throughout the week. The IFO Business Climate in Germany and the ECB’s M3 Money Supply will kickstart the domestic calendar on October 27. Germany’s GfK Consumer Confidence and the ECB’s Consumer Inflation Expectations are expected on October 28. On October 30 will come Germany’s labour market report, followed by the advanced Inflation Rate and flash Q3 GDP Growth Rate; in the broader Euroland, the Unemployment Rate is due alongside the advanced Q3 GDP Growth Rate and the final print of the Consumer Confidence tracked by the European Commission. Retail Sales in Germany and the preliminary Inflation Rate in the euro bloc will be released on October 31.

A poor weekly performance prompted GBP/USD to leave behind prior gains and refocus on the downside as it navigates its second consecutive month of losses so far. The CBI Distributive Trades is due on October 27. The BoE’s Consumer Credit figures will be published on October 29, along with Mortgage Approvals, Mortgage Lending, M4 Money Supply and Net Lending to Individuals. The Nationwide Housing Prices will close the UK docket on October 31.

Political jitters favoured the fresh selling pressure on the Japanese Yen, lifting USD/JPY to two-week highs north of the 152.00 hurdle amid strong gains in the last few days. Japan’s Consumer Confidence is due on October 29. Foreign Bond Investment figures are due on October 30, while the Unemployment Rate, Tokyo Inflation Rate, Retail Sales, Industrial Production, Housing Starts and Construction Orders are all due on October 31.

AUD/USD clocked its second consecutive week of gains, managing to retake the 0.6500 region against the backdrop of the continuation of the broad consolidative phase. The Inflation Rate and the Monthly CPI Indicator will take centre stage on October 29. Australia’s Export and Import Prices are due on October 30, while Producer Prices, Housing Credit and Private Sector Credit are all expected on October 31.

Anticipating economic perspectives: Voices on the horizon

• The RBA’s Bullock speaks on October 27, followed by the ECB’s Elderson and Tuominen and the BoE’s Oakes.
• The Fed’s Powell will speak on October 29.
• The BoJ’s Ueda will speak on October 30, followed by the ECB’s Lagarde and the Fed’s Logan.
• The Fed’s Logan, Bostic and Hammack are due to speak on October 31.

Central banks: Upcoming meetings to shape monetary policies

• The BoC meets on October 29 (2.50% act. vs. 2.25% exp.), followed by the Federal Reserve (4.00%-4.25% act. vs. 3.75%-4.00% exp.).
• The BoJ will decide on rates on October 30 (0.50% act. vs. 0.50% exp.), alongside the ECB (2.00% act. vs. 2.00% exp.).