09.10.23 - 13.10.23
Results of the previous week
| HO+7.59% | XAGUSD +3.19% | WHEAT+2.51% |
NG -6.54% | TF -1.97% | NZDUSD -1.63% |
US stocks kicked the week off on a positive note. They were partly supported by a drop in 10-year Treasury bond yields. Markets also anticipated that the US Fed wouldn't proceed with another rate hike. But the Consumer Price Index data release changed all that. Despite expectations, the indicator remained the same, signalling no signs of a decrease in price pressure. Now, fears of further monetary policy tightening by the Fed are back, which have led to stock indices undergoing a correction.
The dollar strengthened against the euro and the pound after it emerged that inflation data remained unchanged. Commodity currencies (the Australian and New Zealand dollars) declined amid geopolitical conflict in the Middle East. The situation could affect the entire global economy, leading to decreased demand for raw materials.
The escalating Arab-Israeli conflict led Brent oil (BRN) to open with a gap up. That's not surprising, given that the whole region, which accounts for fairly large volumes of oil production, could be pulled into the conflict. Meanwhile, another supportive factor for oil prices is that OPEC has once again affirmed its forecast for global oil demand growth in 2023, predicting an increase of 2.4 million bpd.
Key events of the current week
Germany. ZEW Indicator of Economic Sentiment | DATE 17.10 | GMT | FORECAST | PREV. | IMPORTANCE |
The German economy is in a difficult place at the moment. The manufacturing PMI has trended downward due to a change in supply chains and the price of energy resources. The service sector is trying to recover, but the process is moving very slowly. As a result, economic expectations for the upcoming six months are down. This situation has persisted for the past four months. Concerns about the outlook for the German economy, the largest economy in the Eurozone, are hurting the euro.If the report meets expectations, EUR/USD could return to 1.0450.. | |||||
The US. Retail sales | DATE 17.10 | GMT | FORECAST | PREV. | IMPORTANCE |
Domestic consumption plays a massive role in the US economy. Given the renewed increase in price pressures, there's a likelihood that consumption will decline. And while the indicator is on the rise, it's increasing more slowly. That's not the best scenario for the US economy. Despite moderate growth in inflation, signs of weakness in the economy could lead to the US Federal Reserve not aggravating the situation with a rate hike and keeping it at the same level. These expectations are bad news for the dollar. In such a scenario, USD/JPY could decline to 148.20. | |||||
The UK. Inflation rate | DATE 18.10 | GMT | FORECAST | PREV. | IMPORTANCE |
The UK's inflation rate is one of the highest among G7 countries despite the Bank of England already performing 14 rate hikes. Amid the economy's cooldown, the regulator will be unlikely to actively fight price pressure. This was the reason why the regulator paused rate hikes at its last meeting. Global analysts expect the UK's inflation to continue to decline gradually, which will allow the Bank of England to prolong the pause in its rate hike cycle. However, this isn't good for the pound.If the indicator meets forecasts, GBP/USD could return to 1.2100. | |||||
![US inflation report adds certainty in anticipation of the Fed's interest rate decision [Weekly digest]](/sites/default/files/styles/image_300x120/public/news/shutterstock_2090820298_8.jpg?itok=sKGHC_v_)
