Forex Weekly Outlook October 7-11 – Fed minutes, inflation, and the consumer in focus

Non-Farm Payrolls and the American political turmoil rocked markets. What’s next? The Federal Reserve’s meeting minutes, inflation figures, and consumer sentiment stand out. Here the highlights for the upcoming week.

1. FOMC Meeting Minutes: Wednesday, 18:00. The minutes from the September meeting may shed some light on the divisions within the world’s most powerful central bank. The Fed decided to cut rates for the second time in a row and refused to hint more reductions are underway. Three members voted against the majority decision. Are hawks gaining control? Or is the central bank becoming more worried about global developments? It is essential to note that while the minutes document an event that took place three weeks before its release, officials edit the document until the last moment in order to convey a message to the public.
2. UK GDP: Thursday, 8:30. The British economy grew by 0.3% in July after stagnating in July and contracting in the second quarter. The upcoming report is for August — Boris Johnson’s first month as prime minister. It will be interesting to note if the economy continues growing — in line with upbeat employment figures — or suffers from Brexit uncertainty.
3. ECB Meeting Minutes: Thursday, 11:30. The European Central Bank releases the minutes from the dramatic decision to cut the deposit rate to -0.50% and to introduce additional bond-buying from November — at a rate of €20 billion per month. Those announcements were controversial and triggered criticism from several members of the Frankfurt-based institution. Did the ECB act too soon? Will it continue with its easing policy or are hawks ready to hit back? The minutes may reveal where the wind is blowing.
4. US inflation: Thursday, 12:30. Prices are picking up in the world’s largest economy after a long period of subdued inflation. While the headline Consumer Price Index (CPI) rose by a modest 0.1% in August, Core CPI advanced by 0.3% — pushing the annual increase to 2.4%. The data for September is critical for the next Fed decision. Another acceleration in core inflation may end speculation of another cut.
5. Canadian jobs report Friday, 12:30. Canada’s employment market receives the full focus as the Non-Farm Payrolls has already been published   Canada returned to enjoying significant gains in jobs, with an increase of 81,100 positions in August, around four times the early expectations. That left the jobless rate at 5.7% — as more Canadians join the workforce. A more modest increase is likely for September.
6. US Consumer Sentiment: Friday, 14:00. Consumers have been holding up the economy in recent months, but their confidence is starting to erode — albeit from high levels. The University of Michigan’s Consumer Sentiment Index stood at 93.2 points according to the final read for September — above August’s level but below the near-100 levels seen beforehand. We will now receive the preliminary data for October.

*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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