Looking ahead to the next week, the third quarter GDP, consumer confidence, inflation, and expenditure data in the United States will become the focus of the market. As inflation returns to the attention of investors, the remarks of Federal Reserve officials are expected to trigger significant market trends this week.
Although the real estate industry is an important barometer of the overall US economy, investors must pay more attention to consumer confidence data. A decrease in consumer confidence may indicate a poor outlook for consumer spending.
It is worth noting that private consumption contributes over 60% to the US economy. If consumer spending prospects are weak, it may have an impact on the economy and may reduce the necessity for the Federal Reserve to adopt a more aggressive interest rate hike trajectory.
On Wednesday, the market focus will be on the US third quarter GDP data. Personal income, inflation, and expenditure data may have a greater impact on the Federal Reserve's policy measures. Weak inflation and a slowdown in spending and income will trigger speculation that the Federal Reserve will cut interest rates in May next year. These key data will be released on Thursday
Friday's ISM manufacturing PMI data also needs to be considered. Although manufacturing contributes less than 30% to the US economy, any deterioration in industry conditions may test the bet on a "soft landing" for the economy.
The bet on interest rate cuts is wavering, and the Federal Reserve's statement becomes crucial
As inflation becomes the focus of attention, a spokesperson for the Federal Reserve will influence market sentiment towards the Fed's interest rate cut. Federal Reserve Chairman Powell will deliver a speech on Friday. FOMC members Bar, Bauman, Goolsby, Mest, and Waller will also give speeches. The market will further consider comments on inflation, economic outlook, and monetary policy.
Last week, the euro/dollar rose 0.22% to close at $1.09328. Last Tuesday, it rose to a high of $1.09652 and then fell to a low of $1.08522 from last Wednesday.
On Tuesday, investors will shift their focus to German consumer confidence data. The positive shift in consumer confidence may further indicate that the macroeconomic environment is improving.
However, inflation data from Germany (Wednesday), Spain (Wednesday), France (Thursday), and the eurozone (Thursday) will have a more substantial impact on policy speculation by the European Central Bank. Weak data may spark discussions about the possibility of interest rate cuts.
In addition, it is necessary to consider German retail sales, French consumer spending, and unemployment rate data for Germany and the eurozone. Although these reports are relevant, their importance may be secondary compared to inflation data.
At the same time, manufacturing purchasing managers' index (PMI) data from France, Germany, Italy, Spain, and the Eurozone will also be the focus.
Among them, PMI data from Italy and the eurozone may attract more investor attention. It is worth noting that the manufacturing purchasing managers' indices for the Eurozone, France, and Germany will be the final data.
European Central Bank President Lagarde plans to deliver speeches on Monday, Tuesday, Thursday, and Friday. On Tuesday, European Central Bank Chief Economist Philip Ryan will give a speech.
The discussion on inflation, economic prospects, and the timing of interest rate cuts will change the situation.
Euro/USD
(Source: TradeView)
The euro/dollar remains above the 50 day and 200 day moving averages, confirming a bullish price signal. The return of EUR/USD to $1.10 will cause bulls to operate at resistance levels of $1.10720 and $1.11.
Inflation data and forward-looking guidance from the central bank will affect recent price trends.
Breaking below the support level of $1.09294 will bring the support level of $1.07838 into view. Higher than expected US inflation data and weak Eurozone inflation data will lead to a decline in the euro/US dollar.
The RSI reading is 67.79, indicating that the euro/dollar will rise to $1.10 before entering the overbought zone.
On the 4-hour chart, the euro/dollar breaking through last week's high of $1.09652 will support it to rise to the resistance level of $1.10720.
However, breaking below the support level of $1.09294 will put the 50 day moving average into effect. Breaking below the 50 day moving average will cause bears to operate at the support level of $1.07838.
The RSI reading is 59.98, indicating that the euro/dollar will rise to $1.10 before entering the overbought zone
pound
In the first half of the week, the pound will depend on the Bank of England. Bank of England Governor Andrew Bailey plans to deliver speeches on Tuesday and Wednesday, and investors need to consider further discussing the timing of interest rate cuts.
Monetary Policy Committee member Johanathan Haskel will give a speech on Wednesday
On Thursday, we need to consider housing price data. The decline in housing prices may affect consumer confidence and spending plans. The weak consumer outlook may affect the UK economy and increase the bet on the Bank of England's interest rate cut.
Cad
In the first half of the week, market risk sentiment and oil prices may affect demand for the Canadian dollar. However, Thursday's third quarter GDP data will pique investor interest. Better than expected GDP data will bring uncertainty to the monetary policy of the Bank of Canada.
On Friday, employment data will change the situation. Last week, the People's Bank of China hinted at the end of the policy tightening cycle. The tightening labor market conditions may question the prospects of the dovish faction.
element
On Tuesday, retail sales will affect the trend of the Australian dollar. The rebound in consumer spending may exacerbate demand driven inflationary pressures and support the Reserve Bank of Australia in adopting a more hawkish interest rate path
A more hawkish interest rate path will increase borrowing costs and reduce disposable income.
On Wednesday and Thursday, investors will pay attention to the real estate industry data. If the real estate industry deteriorates, it will further affect consumer confidence and spending.
On Thursday, the third quarter private new capital expenditure data also needs to be considered. However, capital expenditure data is unlikely to affect the bet on a rate hike by the Federal Reserve of Australia.
New Zealand dollars
On Wednesday, the interest rate decision of the New Zealand Federal Reserve will affect the trend of the New Zealand dollar. Economists expect the Federal Reserve of New Zealand to maintain its cash rate at 5.50%, and unless unexpected policy measures are announced, its press conference will have a greater impact on the New Zealand dollar. Any discussion of interest rate cuts will also affect the New Zealand dollar.
At the same time, China's PMI data will continue to drive the development of the situation.
Japanese yen
Thursday's retail sales data will affect the trend of the Japanese yen. The rebound in consumer spending will support the Bank of Japan to exit its bet on negative interest rates, while the upward trend in consumption will exacerbate demand driven inflationary pressures.
On the same day, it is also necessary to consider that an unexpected decline in industrial production data will indicate a weak macroeconomic background and provide breathing space for the Bank of Japan.
On Friday, investors will focus on unemployment rates and capital expenditure data. The unexpected increase in unemployment rate may have a greater impact on the demand of Japanese yen buyers. The weak labor market environment will alleviate private consumption and delay the necessity for the Bank of Japan to take policy measures.
