Key Events This Week: October 19th-23rd

Key Events This Week: October 19th – October 23rd

Mon: CNY GDP Tues: AUD – RBA Meeting minutes, USD -Housing starts and building permits, JPY – Exports, Imports Weds: CAD – BOC Rate decision and monetary policy report, GBP – Public sector net borrowing Thurs: EUR – ECB Rate decision and monetary policy statement, CAD – Retail sales, GBP – Retail Sales Fri: EUR – Services and manufacturing PMIs, CAD – CPI, USD – Manufacturing PMI

Overview

• USD was initially lower last week, extending losses from the release of the Dovish FOMC minutes release, but was able to recover better ground into the week-end. Data was mixed, with Retail Sales missing with a print of 0.1% vs 0.2% expected and a CPI falling also printing -0.2% MoM. However, stickiness in core CPI, which surpassed expectations printing 0.2% MoM and 1.9% YoY led the dollar recovery, which was supported by Friday’s US Consumer Confidence survey beat of 92.5 vs 89 expected. Data focus this week will turn to housing starts on Monday and Manufacturing PMIs on Friday.
• EUR The single currency benefited from USD weakness to challenge the key 1.1460 level resistance before reversing sharply last week. Comments from ECB’s Nowotny regarding the need for further measure to boost ECB spurred the sell-off. Eurozone September CPI was confirmed at -0.1%, with the German ZEW survey showing weakness printing 1.9 vs 6.5 expected. Expectations for further intervention by the ECB are growing ahead of their upcoming meeting this Thursday,
• GBP Last week saw wild volatility for sterling. Having sold off sharply following the September CPI data, which showed another dip into deflation at -0.1%, price reversed sharply higher with the recovery boosted further by the latest UK employment data showing that unemployment has hit a seven year low at 5.4% and wage growth continues to increase rising to 3.0% from 2.9% previous. Traders will turn to public sector net financing data on Wednesday and retail sales on Thursday.
• JPY The Japanese yen was stronger last week as weakness in Chinese imports and CPI spurred safe haven flows. BOJ minutes release showed that the BOJ remain content with the effects of the current QE program, with members remaining upbeat over the inflationary path and economic recovery.
• AUD The Australian dollar remained resilient this week, fighting to retain gains made over the previous fortnight. Commodity weakness early in the week, spurred by the data weakness in China, saw the Aussie losing ground before price was able to recover on USD weakness following weak Retail Sales figures, only to be led lower on post US-CPI dollar strength, ending below last week’s highs. Traders will focus on the release of the RBA meeting minutes release looking for further colour following the Bank’s very neutral October statement.
• CAD Despite the decline in oil this week, falling back from the $50 per barrel level, the Canadian dollar was able to retain gains made against the US dollar amidst USD weakness. Traders now look ahead to the Bank Of Canada rate decision this upcoming Thursday with the Canadian general election on Monday adding further uncertainty to the trading outlook.