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Week Ahead: All Eyes on BOC Rate Statement and ECB Rate Statement


Make informed decisions with the most up-to-date and reliable financial data, exclusively provided by vtmarkets.com.

What happened in the market last week?
  • Rising mortgage rates in the US pushed the housing market closer to recession, with September home sales the slowest since 2010.
  • Despite challenges, China’s economy grew solidly in Q3, possibly nearing a 5% growth target.
  • Market participants were wary of factors that might prompt the Fed to raise rates, such as Middle East conflicts, increasing commodity prices, and wartime spending.

Source: VT Markets MT4

Last Week Market Pair Changes (All data is taken from the MT4 VT Markets)

After Federal Reserve Chairman Jerome Powell’s speech, which echoed previous sentiments, the US Dollar (USD) weakened, leading to an appreciation of the Euro against the USD. However, geopolitical tensions in the Middle East later bolstered the USD’s strength. Traders are now keenly observing the situation and its implications for the USD.

  • The NAS100 index decreased by 3.08%.
  • The DJ30 index decreased by 1.76%.
  • The GBP/USD currency pair increased by 0.28%.
  • The USD/JPY currency pair increased by 0.35%.
  • The EUR/USD currency pair increased by 0.85%.
  • The USO/USD pair increased by 1.95%.
  • The XAU/USD pair increased by 2.65%.

Source: VT Markets Economic Calendar

What to focus on this week?

Several key events are expected to influence the financial markets this week, including interest rate decisions from the Bank of Canada (BOC) and the European Central Bank (ECB). In light of this, we recommend traders to exercise caution in their trading preparations, keeping in mind the potential for increased market volatility.

Here are some key highlights to keep an eye on during the week:

UK Claimant Count Change (24 October 2023) 

The number of people claiming unemployment benefits in the UK increased by 900 in August 2023. 

Updated figures will be released on 24 October, with analysts expecting an additional increase of 2,300. 

Takeaway: The anticipated rise in the Claimant Count Change suggests a potential further economic deceleration. This might negatively impact the British Pound.

Flash Manufacturing PMI for Germany, the UK, and the US (24 October 2023)

Germany’s manufacturing Purchasing Managers’ Index (PMI) climbed from 39.1 in August 2023 to 39.6 in September 2023. Meanwhile, the UK’s manufacturing PMI for the same period increased from 43 to 44.3. Finally, the US manufacturing PMI for the same period rose from 47.9 to 49.8.

Updated figures will be released on 24 October, with analysts expecting manufacturing PMIs of 40.1 for Germany, 44.7 for the UK, and 49.5 for the US.

Takeaway: We anticipate the forthcoming Manufacturing PMI data for Germany, the UK, and the US to gain insights into their manufacturing sectors’ health. Based on the forecasted data, their currencies might weaken, as the manufacturing sector hasn’t indicated expansion.

Flash Services PMI for Germany, the UK, and the US (24 October 2023)  

Germany’s services PMI rose from 47.3 in August 2023 to 50.3 in September 2023. Conversely, the UK’s services PMI declined from 49.5 to 49.3 during this period, while the US’ services PMI also fell from 50.5 to 50.1 during the same period.

Analysts’ forecasted services PMIs for October 2023 are as follows: 50.1 for Germany, 49.4 for the UK, and 49.9 for the US. 

Takeaway: The upcoming Services PMI data for Germany, the UK, and the US will offer insights into the health of their service sectors. Given the data forecasts, we expect a potential decline in their respective currencies, as the services sector appears to be slowing down.

Australia Consumer Price Index (25 October 2023)

The Consumer Price Index (CPI) in Australia increased by 5.2% in August 2023, up from the 4.9% rise recorded in July 2023. 

Analysts are expecting a growth rate of 5.4% for September 2023, with updated figures to be released on 25 October.

Takeaway: The release of Australia’s CPI data will shed light on price fluctuations. This might influence the RBA’s decisions in their upcoming meeting. Given the anticipated figures, the Australian Dollar could see an uptick.

Bank of Canada Rate Statement (25 October 2023)

The BOC maintained its overnight rate target at 5% during its September 2023 meeting, marking another pause in its tightening cycle. The bank indicated that future rate decisions would hinge on the most recent economic indicators.

The next rate statement is set to be released on 25 October, with analysts expecting rates to remain at 5%.

Takeaway: The BOC’s interest rate statement this week is expected to cause significant volatility for the Canadian Dollar. While market experts anticipate the central bank will keep the interest rate steady, this could lead to a potential weakening of the Canadian Dollar.

European Central Bank Main Refinancing Rate (26 October 2023) 

During its September 2023 meeting, the ECB increased its main refinancing rate by 25 bps to 4.5%. The decision to hike the interest rate was closely contested among ECB members, with the meeting minutes revealing that they were divided by tactical considerations. 

Analysts expect the central bank to maintain a rate of 4.5% following its upcoming meeting on 26 October.

Takeaway: The upcoming ECB Rate statement may cause heightened volatility in the Euro. With market experts predicting that the central bank will hold the interest rate steady, the Euro could potentially face downward pressure.

US Advance GDP (26 October 2023) 

The US economy expanded at an annualised rate of 2.1% in Q2 2023, down slightly from the 2.2% growth in Q1 2023.

Data for Q3 2023 is scheduled for release on 26 October, with analysts projecting a growth rate of 4.3%.

Takeaways: The US Advance GDP release is poised to be a significant market mover for the US Dollar. This report will offer insights into the preliminary GDP status in the US. Given the anticipated figures, the US Dollar has the potential to strengthen.

US Core PCE Price Index (27 October 2023) 

The Core Personal Consumption Expenditure (PCE) Price Index for the US, excluding food and energy, rose by 0.1% month-over-month in August 2023. This was the smallest increase since November 2020.

Data for September 2023 is scheduled for release on 27 October, with analysts expecting a growth of 0.3%.

Takeaway: We anticipate the US PCE Price Index data, which provides insight into consumer spending. This could significantly influence the US Dollar. Forecasts hint at increased spending, which might bolster the US Dollar.

Make informed decisions with the most up-to-date and reliable financial data, exclusively provided by vtmarkets.com.