Forex Market Outlook For The Week October 22 – 26, 2018

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Last week, the currencies wobbled amid an unsuccessful EU Summit to discuss Brexit and after the U.S. released mixed economic data. The retail sales data released by the U.S. was disappointing. While retail trade unexpectedly dropped, JOLTs job openings scaled another record high. The EU Summit for discussing Brexit closed without any scope of clearing the stalemate. The clock continues to tick, putting pressure on the British pound and to some extent on the euro.

In the upcoming week, third quarter advance GDP numbers are scheduled for release in the U.S. Interest rate decisions from the BoC and ECB also stand out. Here is an outlook on some of the key releases for the next week:

#1: U.K. BoE Governor Mark Carney Speaks (10/23/2018 Tuesday 15:20 GMT)

forex market outlookMark Carney, Governor of the Bank of England, is scheduled to speak at a conference on machine learning being hosted by the University of Toronto. Markets often turn volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates.

#2: Canada BoC Monetary Policy Report (10/24/2018 Wednesday 14:00 GMT)

Released on a quarterly basis, the Monetary Policy Report provides valuable insights into the Bank of Canada’s view on economic conditions and inflation. These are the two key factors that impact the monetary policy decision.

#3: Canda BoC Rate Statement (10/24/2018 Wednesday 14:00 GMT)

The Bank of Canada releases the Rate Statement eight times in a year. The central bank uses it as a tool to communicate with traders and investors as regards the monetary policy. It provides the outcome of the decision on interest rates and a commentary on the economic conditions that impacted their decision. More importantly, the Statement provides an economic outlook and offers clues on future decisions.

#4: Canada Overnight Rate (10/24/2018 Wednesday 14:00 GMT)

The Bank of Canada decided to leave the benchmark interest rate unchanged at 1.5 percent during September after the 25bps hike in the prior meeting. This was in line with analysts’ expectations. Policymakers said that higher interest rates are needed for achieving the targeted inflation rate of 2 percent. The corresponding Bank Rate and deposit rates are 1.75 percent and 1.25 percent, respectively. Forecast for October 2018: Overnight Rate is expected to be raised by 25 basis points to 1.75 percent

#5: Canada BoC Press conference (10/24/2018 Wednesday 15:15 GMT)

The Bank of Canada holds a press conference 75 minutes after the announcement of the Overnight Rate on a quarterly basis. There are two parts to the press conference. The first involves the reading of a prepared statement. Then the conference is left open for questions by the press. As the questions generally lead to answers that are unscripted, heavy market volatility can be anticipated.

#6: Euro Zone Main Refinancing Rate (10/25/2018 Thursday 11:45 GMT)

The European Central Bank decided to leave the interest rate at the 0 percent level during the meeting held on September 13. The decision was in line with analysts’ expectations. Policymakers noted again that the monthly rate of purchase of assets would be cut down to euro 15 billion for the period September to December this year. In addition, the central bank noted that it expects the key interest rates to continue to remain at the record low levels through summer last year. Forecast for October 2018: 0 percent

#7: Euro Zone ECB Press Conference (10/25/2018 Thursday 12:30 GMT)

The ECB holds a press conference eight times in a year about 45 minutes after the announcement of the Minimum Bid Rate. The press conference lasts for about an hour and has two parts. The first involves the reading of a prepared statement. Then the conference is left open for questions by the press. As the questions generally lead to answers that are unscripted, heavy market volatility can be anticipated.

#8: U.S. Core Durable Goods Orders (10/25/2018 Thursday 12:30 GMT)

New orders for durable goods manufactured in the U.S. excluding transportation remained flat in the month of August after rising by 0.2 percent in July. The reading for August missed analysts’ expectations for an increase of 0.5 percent. Forecast for September 2018: an increase of 0.3 percent is expected.

#9: U.S. Advance GDP (10/26/2018 Friday 12:30 GMT)

The real gross domestic product or GDP rose at an annualized rate of 4.2 percent in the June quarter of this year as per the third and final estimate provided by the Bureau of Economic Analysis. In the March quarter, the real GDP expanded by 2.2 percent. Forecast for the third quarter: the Bureau of Economic Analysis is expected to report a growth rate of 3.3 percent.

#10: Euro Zone ECB President Mario Draghi Speaks (10/26/2018 Friday 14:00 GMT)

Mario Draghi, the President of the European Central Bank, is scheduled to speak in Brussels at the Lamfalussy Lecture hosted by the National Bank of Belgium. Markets often turn volatile during his speeches as investors make an attempt to understand the direction of interest rates.

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