Forecasting the upcoming week: Soft landing or not landing at all?

Further recovery in the US Dollar was underpinned by persistent geopolitical tensions in the Middle East throughout the week, while rising bets of a 25 bps rate cut by the Fed in November were also propped up by Fedspeak and data.

The US Dollar Index (DXY) rose for the second week in a row, briefly trespassing the key 103.00 hurdle on the back of the broad-based bearish tone in the risk-linked galaxy and a decent bounce in US yields in the belly and the long end of the curve. The New York Empire State Manufacturing Index is due on October 15, while weekly Mortgage Applications, Export and Import Prices, and the API’s report on US crude oil inventories are due on October 16. The usual weekly Initial Jobless Claims, Retail Sales, the Philly Fed Manufacturing Index, Industrial Production, Manufacturing Production, Business Inventories, the NAHB Housing Market Index, and the EIA’s report on US crude oil supplies will all be released on October 17. Finally, Building Permits and Housing Starts are expected on October 18.

EUR/USD kept its negative bias well in place for the third week in a row, although it managed to rebound from fresh lows just below the 1.0900 barrier at the end of the week. Germany’s Wholesale Prices are due on October 15, seconded by the ECB’s Bank Lending Survey, Industrial Production in the euro area, and the Economic Sentiment in Germany and the euro bloc. On October 17 comes the ECB’s interest rate decision and press conference by President Lagarde. On October 18, Current Account results and Construction Output in the euro zone will be closing the calendar.

The widespread downward bias in the risk complex prompted GBP/USD to add to the previous weekly losses, including a challenge to the key support at 1.3000 the figure. The UK labour market report takes centre stage on October 15, followed by the publication of the Inflation Rate on October 16. Retail Sales will be released on October 17.

USD/JPY ended its second consecutive week of gains closer to the key barrier at 150.00 on the back of extra selling pressure hitting the Japanese yen. Japan’s Industrial Production and Capacity Utilization are due on October 15, while Machinery Orders are expected on October 16. October 17 will see the release of the Balance of Trade figures and the Tertiary Industry Index. The Inflation Rate and weekly Foreign Bond Investment figures are next on tap on October 18.

Following a test of the 0.6700 support, AUD/USD managed to regain some composure towards the end of the week, although it was not enough to prevent the pair to end its second straight week in red figures. The Westpac Leading Index is due on October 16, while the key jobs report in Australia will be at the centre of the debate on October 17.  

Anticipating Economic Perspectives: Voices on the Horizon

• The Fed’s Kashkari and Waller will speak on October 14 along with the BoE’s Dhingra.
• The Fed’s Daly and Kugler speaks on October 15.
• The BoJ’s Adachi is due to speak on October 16., followed by the RBA’s Hunter and the ECB’s Buch and Lagarde.
• The ECB’s McCaul speaks on October 17, followed by the Fed’s Goolsbee and the BoE’s Wood.
• The Fed’s Bostic, Kashkari, Waller and Bostic will speak on October 18.

Central Banks: Upcoming Meetings to Shape Monetary Policies

• The BoT and the BI will meet on October 16.
• The ECB, the BSP and the CBRT will decide on rates on October 17.