In the week starting October 7, the minutes of the most recent meetings of the US Federal Reserve and the European Central Bank will be published. Both central banks have recently decided to revive their monetary stimulus, and the minutes may contain guidelines for further actions.
The Fed has cut interest rates for the second time this year and the market expects it may do so for the third time at the October meeting, as the chances of interest rate cuts exceed 80 percent. Investors will want to know a more detailed approach of FOMC members to the further path of monetary policy in the US, which can be included in the minutes of the last meeting, which will be published on Wednesday, October 9 at 20:00.
We already know from recent data that the slowdown in the manufacturing sector has also affected the US. A strong dollar makes conditions for US exports even worse. In turn, the ongoing trade war, which will now also be fought with the European Union, seems to increase the risk of growth deterioration. It cannot be ruled out that the University of Michigan confidence index, which will be published on Friday, October 11 at 16, may be below expectations.
In turn, inflation data from the United States, which will be published on Thursday, October 10, at 14:30, may not indicate a significant deviation from consensus. Thus, inflation in the US remains relatively close to the Fed's target, so until it increases significantly, the Federal Reserve may have room for further loosening of monetary policy.
On October 10, at 13:30, the minutes of the last ECB meeting will be published, and its meaning will be similar to the publication of the minutes from the US. Investors will look for the shape of monetary policy in the euro area. It is also worth remembering data from Germany. This week on Tuesday, October 8 at 8:00 the data about industrial production will be published.
Meanwhile, in Canada on Friday there will be a report from the labor market, which may have a significant impact on the Canadian dollar. If the data point to a deterioration in the labor market due to the pessimistic approach to global growth caused by the trade war, the chances of interest rates being cut by the Bank of Canada by the end of the year may increase.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal Opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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