The US Dollar extended its gains on its own strength and on Brexit and Italian issues. However, it then lost ground as Fed officials expressed concerns. What’s next? A relatively light week sees US durable goods orders as the main known event, and there are a lot of unknowns in the political scenes. Here the highlights for the next week.
Italy remained defiant as the deadline for responding to the European Commission regarding the budget came and went. Brexit negotiations are in trouble mostly because the UK government cannot agree among itself. The US Dollar continued gaining ground. However, the Fed sent the US Dollar lower. Chair Jerome Powell noted global headwinds but remained relatively confident. But then came Kaplan, Clarida, and Harker which not only seemed to express not only worries but also seemed in no rush to raise rates.
- Eurogroup meetings: Monday. The gathering of euro-zone finance ministers was a top-tier event in the heyday of the Greek crisis and then faded away. It is of growing importance now as Italy and the European Commission remain at loggerheads over the budget. The meeting between Italian FinMin Giovanni Tria and his European colleagues is an opportunity to thrash out their disagreements or continue the clash and produce more concerning headlines for the Euro.
- FOMC Member John Williams talks Monday, 15:45. The President of the New York Fed is considered No. 3. After we heard the dovish twist on Friday, it will be interesting to hear if Williams, usually an optimist, is also concerned about global headwinds, the US fiscal debt, and if he sees a need to slow down rate hikes.
- US Durable Goods Orders: Wednesday, 13:30. Orders of durable goods rose by 0.7% in September according to the final read. However, core orders remained flat. The data feeds into GDP calculations and is closely watched by the Federal Reserve. The figure provides an update on investment, a part of the economy that has not picked up. We will now receive figures for October.
- ECB Meeting Minutes: Thursday, 12:30. The European Central Bank releases its monetary policy accounts four weeks after the rate decision. Back then, President Mario Draghi remained confident about the inflation situation and about growth. However, growth has significantly slowed down and other economic signs have disappointed. Will we see a more dovish and worried stance by the Frankfurt-based institution? The publication may have a considerable impact as it is released on Thanksgiving and many Americans may be away, causing low market liquidity.
- Canadian retail sales and inflation: Friday, 13:30. Both top-tier are released at the same time and may have an outsized impact due to low liquidity. Headline Consumer Price Index (CPI) fell by 0.4% in September. Core CPI remained flat, also an unflattering outcome. However, other measures of Core CPI, the Trimmed, Media, and Common, remained stable around 2%. We will now get data for October. Back in August, Canadians squeezed their spending: retail sales slipped by 0.1% on the headline and 0.4% on the core. We will now get an update for September. While the data is lagging, consumption is of high interest and a significant deviation from expectations can certainly move the loonie.
*All times are GMT
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