Traders are in for a busy week with TWO central bank decisions, global PMI data, and Uncle Sam’s initial Q3 GDP reading.
And that’s before we consider geopolitical updates from the Middle East and closely watched earnings reports from the U.S.!
Before all that, ICYMI, I’ve written a quick recap of the market themes that pushed currency pairs around last week. Check it!
And now for the closely-watched economic indicators on the calendar this week:
U.K. jobs data
Last week’s wage growth and consumer price reports have only marginally eased the pressure on the Bank of England (BOE) to keep its monetary policies tight. The official labor market numbers are scheduled on Oct 24, 6:00 am GMT.
Markets see the unemployment rate steadying at 4.3% while jobless claimants could swell from 0.9K to 22.0K. Unless the numbers come in strong enough to not be ignored, the BOE still has enough room to keep its interest rates steady in November.
Global PMI reports
The first business activity indicators for Q4 will be out this week!
Australia (Oct 23, 10:00 pm GMT) will start the party with both its manufacturing and services PMIs expected to weaken in October. Japan (Oct 24, 12:30 am GMT) will follow shortly with its services PMI seen dipping from 53.8 to 52.9 while its manufacturing PMI improves from 48.5 to 49.0.
France (Oct 24, 7:15 am GMT) and Germany (Oct 24, 7:30 am GMT) are next and are generally expected to print higher numbers compared to September. Ditto for the Eurozone (Oct 24, 8:00 am GMT) in general, which could see its services PMI rise from 48.7 to 49.1 while the manufacturing PMI pops from 43.4 to 43.8.
Even the U.K. (Oct 24, 8:30 am GMT) is expected to print improved services and manufacturing PMIs at the start of the quarter. We can’t say the same for the U.S. (Oct 24, 1:45 pm GMT), which may see slightly lower services (50.1 to 49.8) and manufacturing (49.8 to 49.5) PMIs after two months of near-stagnation.
Recall that the IMF recently warned of a “soft landing scenario” for the global economy with “growing divergences” among major economic regions. Watch out for hints of sharp downturns that may cause hard-landing speculations!
BOC’s policy decision
Recent Canadian wage and consumer price reports pointed to sticky high inflation but some leading indicators also hint at moderating price pressures.
Will the Bank of Canada (BOC) maintain its hawkishness this week? On Oct 25, 2:00 pm GMT, markets see the central bank taking a page from the other major central banks’ playbook and keeping its interest rates steady at 5.00%.
There will be a presser at 3:00 pm GMT, though, so make sure you keep your eyes glued to the tube in case we see a hawkish hike that may push CAD higher!
ECB’s policy decision
On Oct 26, 12:15 pm GMT, the European Central Bank (ECB) is expected to keep its interest rates steady at 4.50%. That’s after TEN consecutive meetings of interest rate hikes!
Word around is that the ECB interest rate has hit its peak as inflation becomes less of a threat and the economy is showing signs of weaknesses. The question will likely turn to how long President Lagarde and her team plan on keeping their interest rates at their current high levels.
We may get some clue during Lagarde’s speech a day earlier on Oct 25 at 5:00 pm GMT or during the presser that will follow at 12:45 pm GMT. The presser will happen after the U.S. advance GDP release, so make sure your trades account for extra EXTRA volatility during the event.
US advance GDP
On Oct 26, 12:30 pm GMT, the world’s largest economy is expected to print a GDP jump from 2.1% in Q2 to an initial reading of 4.0% in Q3. The closely watched Atlanta Fed’s GDPNow tracker even sees the annual rate at 5.4% as of October 18!
But don’t forget that GDP readings are mostly lagging indicators. As of last week, Fed Chairman Powell and his gang sounded ready to make room for “long and variable lags” before considering another interest rate hike.