Weekly Outlook: Oct 24 – 28; Many Speeches are Expected
The week ahead includes a number of speeches from policymakers of major banks, including ECB President Mario Draghi, BoE Governor Mark Carney, and SNB Chairman Thomas Jordan. U.S. and U.K. GDP growths are coming out, as well as U.S. durable goods orders. In addition, flash Markit PMIs for U.S., Euro area, U.K., and Germany will be released.
The week starts with the first Markit PMIs estimates for October. In Germany, both the services and manufacturing PMIs are forecasted to improve, dragging the composite index up as well. Eurozone’s services sector is expected to show a small improvement to 52.5 from 52.2 before while the manufacturing is expected to remain at 52.6. A couple of hours later, the Germen Buba monthly report will be released. Later in the day, the U.S. flash Markit manufacturing PMI is predicted to tick higher at 51.6 from 51.5 in September. Four Fed members, William Dudley, James Bullard, Charles Evans and Jerome Powell will give public speeches one week ahead of Fed’s policy meeting and two weeks before of U.S. presidential elections. The SNB Chairman Thomas Jordan also has a speech scheduled.
On Tuesday, BoE Governor Mark Carney’s and ECB President Mario Draghi’s speeches will drive the market. Early in the morning, the German IFO survey for October will be released. The current assessment is expected to tick up slightly at 114.8 from 114.7 before, while the expectations to slow down at 104.0 from 104.5. The business climate is expected to remain unchanged at 109.5. Afternoon, market attention turns to U.S. where the housing price index for August will be released as well as the IBD/TIPP economic optimism for October. Moreover, the consumer confidence for October is expected to slip lower at 102.0 from 104.1 the month prior. Overnight, Australian inflation rate for the third quarter is coming out.
On Wednesday morning, the German Gfk consumer confidence survey will be published. We have a quiet economic calendar in U.K. with only the BBA mortgage approvals for September coming out. In U.S., the Markit services PMI estimate will complete the composite index for September and is forecasted to tick marginally higher at 52.4 from 52.3 before.
On Thursday, we have two spotlight events. Firstly, the preliminary U.K. GDP growth for Q3 is coming out. Compared with the year before, the GDP is expected to keep the same pace of growth for the sector, of 2.1%. But, versus the previous quarter, the GDP is forecasted to slow down at 0.3% from a rise of 0.7% before.
Secondly, the durable goods orders from U.S. are expected to grow 1% in September from a flat month before while the durable goods orders ex-transportation are forecasted to grow 0.2% versus a drop of 0.4% the previous month. The pending home sales for September will be released as well. Overnight, the Japanese inflation and unemployment reports will be published. The headline unemployment rate is expected to have remained unchanged at 3.1% in September. No forecasts are available for September’s National CPI yet.
On Friday, Eurozone’s sentiment indicators and U.S. flash GDP growth will hog the limelight. Eurozone’s sentiment in business and services sectors are not expected to change in October, while consumer confidence, economic sentiment indicator, and industrial confidence are forecasted to deteriorate. German inflation report with the preliminary indicators for October is scheduled to be released.
The U.S. GDP is forecasted to jump at a growth of 2.7% qoq in Q3 versus an expansion of 1.4% the previous quarter. Contrary, the GDP price index which includes inflation is expected to show a preliminary growth of 1.3% from 2.3% before. The personal consumption expenditures are also coming out, as well as the final Michigan consumer sentiment index for October – a marginal increase to 88.0 from 87.9 before is expected.
EUR/USD WEEKLY OUTLOOK
The EUR/USD pair sold off aggressively the past week, opening the door for more weakness to occur, following the decisive break below the key support level at 1.0950. The euro has seen three consecutive negative weeks against the greenback, bringing the monthly performance to -3.34% a week before the end of October.
From a technical point of view, the daily chart shows that the RSI indicator remained bearish over extreme levels, while the momentum indicators also turned south within a bearish territory. On the 4-hours chart, the pair presents a neutral-to-bearish stance, given that the price is below all of the three moving averages, while technical indicators hold flat, but well below their mid-levels. Support lies at the 1.0850 level. Further down, support lies at the 1.0825 level where a violation will aim at the 1.0800 level. Conversely, on the upside, resistance comes in at 1.0885 level with a cut through here opening the door for more upside towards the 1.0910 level. Further up, resistance lies at the key barrier level at 1.0950 where a break will expose the 1.1030 mark. All in all, EUR/USD faces further downside risk.
GBP/USD WEEKLY OUTLOOK
The previous week’s U.K. economic reports failed to help GBP/USD pair to exit the consolidation area that is trading since last week, between the 1.2100 lower boundary and the 1.2330 upper boundary. The only economic report worth watching these days will be GDP on Thursday.
The pair is establishing and trading within a trading range roughly around the key level of 1.2200. Currently, the price is moving slightly below the 50-SMA on the 4-hour chart, as well as, below the 23.6% Fibonacci level of the last big downward move from September 06 to October 07. After the rebound on the 1.2330 resistance level, the pair fell more than 0.7% and is moving towards the 1.2100 psychological level. On the same chart, the technical indicators seem to be in agreement with the bearish attitude since both lie in a bearish territory. The MACD oscillator is moving below zero while the RSI indicator holds below the 50 level.
