The US dollar turned to the upside on Monday. Let's discuss what to expect next from the market.
5 important things this week will bring us!
- The Reserve Bank of Australia rate statement (Tue, 5:30 MT (3:30 GMT)) – the Reserve Bank of Australia is not expected to change its interest rate from the current 1.5%. The main focus will be on the comments about the improving labor market, cooling housing market and international trade. Any reference to the growth of the GDP can result in the rise of the AUD.
- A speech by the Bank of England Governor Mark Carney (Tue, 11:15 MT (9:15 GMT)) – the Bank of England Governor Mark Carney will testify about the Brexit Withdrawal Agreement before the Treasury Select Committee. If his speech contains hawkish comments, the GBP will be supported.
- A speech by the Chair of Federal Reserve Jerome Powell (Wed, 15:15 MT (13:15 GMT)) – On Wednesday the Fed’s Chair will provide a testimony about the economy and monetary policy. The unexpectedly dovish tone of his latest speech shook the markets. That is why every word concerning interest rates will be closely watched. The central bank is expected to increase the interest rate later this month, but the next moves are unclear. We will see if Mr. Powell changes his tone.
- Bank of Canada rate statement (Wed, 17:00 MT (15:00 GMT)) – the Bank of Canada raised its interest rate to 1.75% with the hawkish message. We anticipate the central bank to leave rates unchanged this time, however, the Governor Stephen Poloz and his colleagues may provide hawkish statements, which may signal the possible increase in the rate in January. In addition, the recently-signed USNCA agreement supports the BOC's hawkish view.
- US non-farm employment change and the unemployment rate (Fri, 15:30 MT (13:30 GMT)) – The last release for October outperformed the expectations and showed an increase of 250 thousand positions. At the same time, the unemployment rate remained stable at a low of 3.7%. This time analysts expect the NFP to increase by 200 thousand positions with the same level of the unemployment rate at 3.7%. If the actual digits for the NFP is higher than expected with the low unemployment rate, it will support the USD.
- During the G20 summit this weekend, US president Donald Trump and Chinese president Xi Jinping reached an agreement to hold off new tariffs and intensify trade talks. However, the countries presented different perceptions of the deal. For now, China is expected to take measures on IP protection, increase agricultural import and change the car tariffs. If the negotiations fail, the US will raise its 10% tariffs to 25%.
- Italy is preparing to change its target deficit of 1.9% to 2%. However, Italy's deputy prime minister Matteo Salvini said he was not happy with this change. Further comments or uncertainties will move the EUR during this week.
- The OPEC+ meeting is expected on Thursday. This weekend provided very upbeat headlines for oil as Russia and Saudi Arabia agreed to extend their oil pact and the Canada largest producing province ordered 8.7% supply cuts. This formed a gap-up day for both Brent and WTI.
Three main drivers of the market: the stimulus package, the US presidential election and the coronavirus. Let's look how market reacts.
EU Flash Manufacturing & Services PMI will come out on Friday at 11:00 MT time!
The focus of traders’ attention shifted from Brexit and the US stimulus to the coronavirus . The WHO claimed that Europe become the new Covid-19 epicenter.
Canada will publish the monthly GDP growth on October 30 at 14:30 MT time.
The European Central Bank publishes the monetary policy statement alongside with an update on the interest rate on October 29, at 14:45 MT time.