• ECB speakers will deliver their speeches on Monday
  • Several crucial macroeconomic releases from the US economy this week
  • The conference held by Institute of International Finance in Washington will be an opportunity for key central bankers to express their view about the future of monetary policy

Monday is relatively calm with regard to the macroeconomic data, however much more interesting events will be unfolding later this week. Before we present the full tally of data for the upcoming days let’s take a look at some notable speeches from ECB’s members scheduled on Monday.

  • 8:45 am BST – ECB’s Mersch (he speaks at a banking conference in Milan)
  • 5:00 pm BST – ECB’s Latuenschlaeger (she speaks at Hohenheim University in Stuttgart)

As you can see there is little to shake markets today, hence politics could have once again a much more substantial impact on currencies. At the end it’s worth mentioning Norway’s inflation which will be released tomorrow morning (7:00 am BST).

What to watch for this week?

The FOMC meeting proved to be a real turning point for the US dollar in September. The news has been nearly entirely positive for the US currency since then. While the NFP data could be volatile, a surge in business surveys confirms that the economic momentum could justify the third interest rate hike come December. This week will be pretty important for the US dollar as well with minutes, data and Yellen having probably a large impact on markets like EURUSD, USDIDX or Gold.

FOMC minutes (Wednesday, 7pm BST), Yellen’s speech on monetary policy (Sunday, 2pm BST): The Fed surprised to the upside in September clearly suggesting another interest rate hike for this year so a detailed discussion could be important for the markets. Investors will be looking for details not only related to this but also the next year as the current pricing of future interest rate hikes is low. Janet Yellen may have only few months left at the helm of the Fed but her busy schedule of appearances suggests she could be determined to push through policy normalization process before she is gone. Affected markets are likely to include EURUSD and USDIDX.

US data on inflation and retail sales (Friday, 1:30pm BST): We have the data on employment and business activity but actually it’s inflation that is now critical for the Fed so the CPI data will be of high importance. Do notice that markets expect both the headline and the core (ex food and energy) measure to increase compared to August (2% and 1.8% y/y respectively). Therefore it will be an important test for the greenback. Even if the hike in December was a done deal investors need to determine if 3 more moves in 2018 (as it’s been suggested by some FOMC members) could be justified. The retail sales data could be affected by hurricanes again but it’s typically an important report for the markets as well. Markets like Gold, Tnote and USDJPY could be affected.

Key speeches at the IIF conference (Thursday): It’s not only about the Fed this week, the Institute of International Finance conference will hold some major speeches from Draghi (ECB, 3:15pm BST), Powell (Fed, 3:30pm) and Wilkins (Bank of Canada, 8:15pm) so we can expect a lot of inputs on monetary policy. For the euro it’s an important chance to get some clues ahead of the ECB meeting later in October (26th) and the CAD has been really hot as of late so any comment from the BoC is relevant. Meanwhile, Powell is rumoured to be on the short list for the FOMC Chair so his comments will be thoroughly minced by investors. Expect some moves on pairs like EURUSD, USDCAD and EURCAD.

link do file download linkMeanwhile, the EURUSD has begun the new week slightly lower still hovering just a touch above 1.17. If bears are determined to break this level downward, it could lead to an extended move lower possibly towards 1.1450. Source: xStation5