Forecasting the upcoming week: China and PMIs will rule the sentiment

The US Dollar (USD) reversed its four-week positive streak, coming under fresh downside pressure and closing the week with decent losses despite hitting new highs in the first half of the week. The Greenback’s correction, however, appears temporary as the geopolitical landscape stays far from improved, crude oil prices remain on the rise and expectations for further tightening by the Federal Reserve are mostly unchanged.

The US Dollar Index (DXY) came under renewed downside pressure in the second half of the week, revisiting the area of two-week lows near 101.60 after climbing to as high as the boundaries of the 103.00 hurdle just a couple of days ago.

The NAHB Housing Market Index comes on October 19. The ADP Employment Change Weekly will follow on October 20, seconded by Pending Home Sales, Housing Starts, Building Permits and the API’s weekly report on US crude oil inventories. The usual MBA Mortgage Applications are due on October 21, followed by the EIA’s weekly report on US crude oil stockpiles. The usual weekly Initial Jobless Claims are expected on October 22 alongside the CB Leading Index. The advanced S&P Global Manufacturing and Services PMIs will wrap up the docket on October 23 along with the final U-Mich Consumer Sentiment gauge.

Finally, some respite for EUR/USD saw the pair close the week with acceptable gains beyond 1.1200 the figure, setting aside five consecutive retracements at the same time. The EMU’s Current Account results are due on October 20, followed by the Construction Output reading and the ZEW’s Economic Sentiment in both Germany and the bloc. The flash Consumer Confidence in the euro area is due on October 22, while the preliminary S&P Global Manufacturing and Services PMIs for Germany and the Euroland will be published on October 23.

Following four straight weeks of losses, GBP/USD finally managed to regain some composure, closing the week with decent gains north of the 1.3300 barrier. The key labour market report will be released on October 20. On October 21 will come the Inflation Rate as well as Public Sector Net Borrowing figures. The CBI Business Optimism Index and CBI Industrial Trends Orders are expected on October 22. Closing the UK calendar, the flash S&P Global Manufacturing and Services PMIs, Retail Sales and the GfK Consumer Confidence are all due on October 23.

USD/JPY closed the week in red for the first time after four consecutive advances, hovering around the 158.00 neighbourhood. The Tertiary Industry Index is due on October 19. Balance of Trade results are expected on October 21, while the weekly Foreign Bond Investment figures are due on October 22. On October 23 we will see the Inflation Rate and the advanced S&P Global Manufacturing and Services PMIs.

Quite a choppy week saw AUD/USD reverse the previous advance, ending the week with a lacklustre performance around 0.6950. A very light calendar in Oz will only feature the S&P Global Manufacturing and Services PMIs on October 23.

USD/CNH retreated further, clinching its third consecutive week of losses and trading in levels last seen in July 2022 near 6.6830. Quite an interesting docket in China will see Q3 GDP data on October 19, seconded by Retail Sales, Industrial Production, the Unemployment Rate and the House Price Index.

Anticipating economic perspectives: Voices on the horizon

• The RBA’s Kent speaks on October 19, followed by the ECB’s Sleijpen, Lane and Elderson.
• The BoE’s Mills and Greene will speak on October 20 alongside the RBA’s Connolly.
• The BoE’s Bailey is due to speak on October 21, alongside the ECB’s Lane, Nagel and Lagarde and the RBA’s Hauser.
• The ECB’s Panetta speaks on October 22, followed by the BoE’s Bailey.
• The ECB’s Montagner and Cipollone will speak on October 23.
• The RBA’s Jones will speak on October 25.

Central banks: Upcoming meetings to shape monetary policies

• The PBoC will decide on rates on October 20 (unch), alongside the NBH (unch).
• The BI meets on October 21 (hike by 75 bps).
• The BoK will meet on October 22 (unch) followed by the CBRT (cut by 175 bps).