Forex Weekly Outlook Oct. 28 – Nov. 1 – Explosive week with the Fed, US GDP, and the NFP

A turbulent week in the Brexit saga and Mario Draghi’s final decision as ECB president does not end with time to rest. The Halloween week features the all-important Fed decision, the first read of US GDP for the third quarter, the Non-Farm Payrolls, and additional rate decisions. Here the highlights for the upcoming week.

1. US CB Consumer Confidence: Tuesday, 14:00. The Conference Board’s gauge of economic sentiment has dropped off the peak levels but remains elevated. Indeed, consumers disappointed retailers in September. The figure for October is set to rise from 125.1 to 128.2 points.
2. Australian inflation: Wednesday, 00:30. The land down under publishes inflation data only once per quarter, making each publication significant. Consumer Price Index rose by 0.6% in the second quarter and a slower pace of increase is projected now, 0.5%. Trimmed Mean CPI (known as core CPI in other countries) carries expectations for a repeat of the steady 0.4% increase seen beforehand.
3. US ADP Non-Farm Payrolls: Wednesday, 12:15. Wednesday is when things get busy. ADP’s jobs report for private sector growth is expected to show an increase of 125K positions in October, down from 135K last time. Hiring has slowed down in recent months. ADP’s figures also serve as a hint toward the official employment report on Friday.
4. US GDP (first read): Wednesday, 12:30. The first estimate of Gross Domestic Product tends to have the most substantial impact on prices. After growing at the “new normal” pace of 2% annualized in the second quarter, economists expect a deceleration to 1.6% in the third quarter. Apart from the headline figure, investors will eye the different components. Once again, the consumer is expected to have carried the weight of expansion on their shoulders, while investment and manufacturing are dragging the economy down.
5. Canadian rate decision: Wednesday, 14:00. The Bank of Canada has been standing out with optimism for a considerable time, while its peers cut interest rates or at least set out their intentions to doing so. While the Ottawa-based institution has dropped its hawkish bias, it is unlikely to adopt a dovish one anytime soon. The economy is doing very well, and hiring continues at a break-neck pace. The BOC will likely leave the interest rate unchanged at 1.75% and remain neutral on the next steps, potentially boosting the loonie.
6. Fed decision: Wednesday, 18:00, press conference at 18:30. The Federal Reserve will likely cut interest rates for the third time in a row. While Chair Jerome Powell and his colleagues have been reluctant to commit to the move, they have not come out against the bond markets’ aggressive pacing of a rate reduction this month. Despite the recent truce in the trade war and a mild pickup in inflation, the world’s most powerful central bank remains concerned about the uncertainty and recent jitters in the job market are also of concern. In his press conference, Powell will find it hard to defend this decision as just another “mid-cycle adjustment” as it will have been the third such move in three months. Comments about the outlook, the Fed’s intentions in December, and the number of dissents are all set to rock markets.
7. Japan rate decision: Thursday, early in the morning. The Bank of Japan has been contemplating another rate cut within the negative territory as other central banks have taken steps to ease monetary policy. However, the -0.10% rate has been hurting banks without pushing inflation higher. Governor Haruhiko Kuroda and his colleagues will likely leave interest rates unchanged.
8. Euro-zone inflation figures: Thursday, 10:00. Weak CPI is set to justify President Mario Draghi’s loose monetary policy on his last day at the job. The headline is set to decelerate from 0.9% to 0.7%, far from the bank’s 2% target. Core CPI is set to remain unchanged at 1%. If inflation further falls, the euro may struggle.
9. US Non-Farm Payrolls: Friday, 12:30. The week ends with a bang, the US jobs report is expected to show a significant slowdown in hiring, fewer than 100,000 positions gained in October. The labor market has suffered a slowdown, with 136K in September, like all other sectors, and is no longer isolated. Wage growth is forecast to rise by 0.3% after remaining flat in September, thus providing an encouraging sign for policymakers.

*All times are GMT

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Further reading:

• EUR/USD forecast – for everything related to the euro.
• GBP/USD forecast – Pound/dollar analysis
• USD/JPY forecast – the outlook for dollar/yen
• AUD/USD forecast – projections for the Aussie dollar.
• USD/CAD forecast – Canadian dollar predictions

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