A new week brings a new set of events that can bring volatility to the market. Let’s do a quick overview to see what to expect.
UK GROSS DOSMETIC PRODUCTS (GDP) – OCTOBER 12TH
The UK Office for National Statistics will release the Gross Domestic Product update on Wednesday, 12th October at 14:00 GMT+8. GDP shows the change in the total value of all goods and services produced by the economy. It is widely accepted that the UK economy is in decline. The UK has serious problems with economic growth. The last two weeks have shown that things can always get worse and that the current government has no idea how to change the situation.
On September 23rd, the government of Prime Minister Liz Truss presented its economic plan. Most analysts immediately saw it as a fiscally irresponsible tax cut that would widen the fiscal deficit and stoke inflation. Both are already a problem in the UK. Recent events make it more important than ever to look at what is happening in the UK economy right now. During the data release, if the actual numbers are greater than what is forecasted, GBP will rise. Pairs that are usually eyed by the traders are GBP/USD, GBP/JPY, and EUR/GBP.
US FOMC MEETING MINUTES – OCTOBER 13TH
The Federal Reserve will release the detailed report from the 21st September meeting at 02:00 GMT+8 on October 13. At that time, the Fed raised interest rates by 75 basis points, which was in line with expectations. The Fed continues to raise interest rates, and its Chair, Jerome Powell, said he will keep raising interest rates until inflation returns to the 2% target level. Immediately after the statement, the US dollar rose Index by over 1200 points, the volatility of was significant.
The report will give further explanations regarding of the possibilities of what the Feds could implement. If the Federal Reserve is hawkish, then it will strengthen US currency. But, if it’s the opposite ways, then USD will weaken. Instruments that likely to be traded during this time are USD/JPY, EUR/USD, and XAU/USD.
US CONSUMER PRICE INDEX (CPI) DATA RELEASE – OCTOBER 13TH
The US Bureau of Labor Statistics will release its inflation update on October 13 at 20:30 GMT+8. Inflation is one of the hottest topics right now. That’s because he’s on the Fed’s radar looking to lower inflation. If the next CPI data continues to rise, the Fed could try to change policy to a more aggressive one. Of course, the Fed is already expected to raise rates at the upcoming November and December meetings, but those hikes may be larger or last into 2023. Each scenario is considered. If the US CPI is higher than expected, the USD is likely to appreciate against other currencies. Alternatively, the USD will fall. Pairs that mostly to be traded are USD/CHF, USD/CAD, and EUR/USD.
US CORE RETAIL SALES DATA RELEASE – OCTOBER 14TH
The US Census Bureau will release Retail Sales and Top Retail Sales on October 14 at 20:30 GMT+8. Shows the change in the total cost of goods sold at the retail level. Last time out, US retail sales rose unexpectedly as consumer demand for goods remained broadly flat but showed signs of slowing given historical inflation. US retail sales data show demand is holding up despite high inflation. Economists expect a 0.1% decline in retail sales for this time. For the Federal Reserve, given sky-high interest rates and historically high inflation, consumer demand for goods is holding up well enough to give lawmakers more reason to aggressively raise borrowing costs.
The indicators are likely to impact the USD pairs. You should await the releases and compare the actual figures with those forecast in the economic calendar. If the actual numbers beat expectations, the USD will rise. Conversely, lower numbers will push the USD lower. Traders will focus at XAU/USD, GBP/USD, and USD/CAD during this time for trading.