Three fundamentals for the week: Middle East escalation, BoC decision and US Jobless Claims stand out


  • An Israeli attack against Iran may stir markets ahead of the US elections.
  • The Bank of Canada is set to slash rates, impacting Fed expectations.
  • US Jobless Claims remain a bellwether for the wider economy. 

Gold has reached new highs, but where is the market heading with two weeks to go until the US elections? The waiting period before Nonfarm Payrolls October data, the next decision by the Federal Reserve (Fed) and the vote mean investors are nervous.

Here is a preview of this week's big events.

1) Israeli retaliation against Iran seems imminent after attack on Netanyahu's house

Some three weeks have passed since Iran struck Israel with a barrage of missiles, and a counter-attack is still awaited. Israeli Prime Minister Benjamin Netanyahu had little time to celebrate the killing of the Hamas leader Yahya Sinwar when his private residence was attacked by a drone coming from Lebanon.

It is easy to become confused in the series of attacks and counter-attacks – but it is clear that an attack on Iran may risk global Oil supplies. Israel needs to take US considerations into account, especially ahead of the elections. Markets seem optimistic that any move would be limited due to American constraints, but hostilities have a dynamic of their own.

Headlines from the Middle East are set to continue rocking markets. A limited attack would likely trigger "buy the rumor, sell the fact" price action, which would weigh on Oil, Gold, and the US Dollar. Ongoing fire would support all these assets.

2) The BoC is set to accelerate rate cuts, comments on the US are eyed

Wednesday, decision at 13:45 GMT, press conference at 14:30 GMT. The Canadian economy is struggling under the weight of a sluggish property market, among many woes, despite robust US economic growth. Canada depends heavily on its southern neighbor. 

After cutting interest rates by 25 basis points (bps) three times in a row, economists expect the Bank of Canada (BoC) to announce a bigger 50 bps move – slashing borrowing costs from 4.25% to 3.75%. 

Canadian interest rates. Source: FXStreet

While falling Canadian inflation is a good reason for such a move, worries about the economy would stir markets and weigh on the Loonie. 

At this event, BoC Governor Tiff Macklem addresses the press, and talks about the broader economy. His outlook on the US economy may also have an impact on the US Dollar and the broader market mood.
 

3) US Jobless Claims closely eyed 

Thursday, 12:30 GMT. With a dearth of top-tier indicators, this high-frequency indicator takes center stage. Weekly unemployment claims in the US leaped two weeks ago to 260K from the lows of 225K, and only dropped to 241K last week.

Fresh data from the week ending on October 18 may still be impacted by back-to-back hurricanes, and will be closely watched. The Fed is fully focused on the labor markets, after all but having declared victory on inflation.

Another retreat in Jobless Claims would boost stocks and the US Dollar while weighing on Gold. A worrying increase would support the precious metal while hurting the equities and the Greenback. 

Final thoughts

While there is no decision from any major central bank nor any top data point – and even the elections are not close enough – markets are set to move.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD weakens below 0.6400 ahead of Australian employment data

AUD/USD weakens below 0.6400 ahead of Australian employment data

The AUD/USD pair remains on the defensive near 0.6370 after bouncing off a fresh year-to-date low of 0.6336. The dovish stance by the Reserve Bank of Australia drags the Australian Dollar lower. Traders will closely monitor the Australian November labor market data, along with the US PPI data, which are due later on Thursday.

AUD/USD News
EUR/USD drops below 1.0500 after US inflation data

EUR/USD drops below 1.0500 after US inflation data

EUR/USD stays under pressure and trades below 1.0500 in the American session on Wednesday. The US Dollar stays resilient against its rivals after the data showed that the annual CPI inflation edged higher to 2.7% in November, not allowing the pair to stage a rebound.

EUR/USD News
Gold skyrockets as US inflation suggests Fed easing ahead

Gold skyrockets as US inflation suggests Fed easing ahead

Gold prices prolonged their uptrend on Wednesday following the release of inflation figures in the United States. Expectations that the Federal Reserve would cut interest rates next week were reaffirmed as the disinflation process evolves, yet at a slower pace.

Gold News
Ethereum eyes new yearly high as whale and institutional holdings increase

Ethereum eyes new yearly high as whale and institutional holdings increase

Ethereum is up 6% on Wednesday after bouncing off the support level near $3,550. The spot market shows institutional investors and whales maintained a bullish sentiment, potentially scooping up ETH at lower prices during the recent dip.

Read more
BTC faces setback from Microsoft’s rejection

BTC faces setback from Microsoft’s rejection

Bitcoin price hovers around $98,400 on Wednesday after declining 4.47% since Monday. Microsoft shareholders rejected the proposal to add Bitcoin to the company’s balance sheet on Tuesday.

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Majors

Cryptocurrencies

Signatures