I’m seeing a handful of top-tier events lined up this week!
Among these, the big movers are likely to be the FOMC minutes, U.S. CPI and retail sales data.
Speeches by central bankers might also contain monetary policy clues.
Before all that, ICYMI, I’ve written a quick recap of the market themes that pushed currency pairs around last week. Check it!
And now for the closely-watched potential market movers this week:
Major Economic Events:
U.K. employment data (Oct. 11, 6:00 am GMT) – How is the U.K. jobs market doing in the middle of the economy’s struggle with inflation?The September claimant count change might show another increase in joblessness, as an estimated 4.2K fellas likely filed for unemployment benefits during the month.
Although this would be lower compared to the earlier 6.3K uptick in joblessness, note that the actual figures have been missing the mark for the past four months in a row.
Meanwhile, the average earnings index for the three-month period ending in August likely ticked higher from 5.5% to 5.9%. While rising wages sounds good for consumers, this would mean more upside pressure on overall inflation.
FOMC meeting minutes (Oct. 12, 6:00 pm GMT) – In their latest policy decision, the Fed hiked interest rates by another 0.75% as expected in order to combat rising price pressures.
The transcript of their meeting should shed more light on their growth and inflation outlook, as well as the members’ policy biases.
Note that the committee downgraded GDP and employment forecasts while upping their inflation estimates, so reiterating this view might revive risk-off flows.
U.S. inflation figures – Uncle Sam will be printing another batch of inflation-related data this week, namely the PPI (Oct. 12, 12:30 pm GMT) and CPI (Oct. 13, 12:30 pm GMT) reports.
Headline producer prices for September likely rebounded by 0.2% after the earlier 0.1% dip while the core PPI probably slowed from 0.4% to 0.3%.
As for the CPI, the headline reading might show a 0.2% monthly uptick, but the year-over-year figure is projected to dip from 8.3% to 8.1%. The core CPI could come in at 0.4%, which would be slower compared to the earlier 0.6% gain.
U.S. retail sales (Oct. 14, 12:30 pm GMT) – Average consumers are likely feeling the weight of the price increases these days. The headline retail sales figure is estimated to post a 0.2% uptick, lower than the earlier 0.3% gain, while the core reading probably dipped by 0.1%.
Weaker than expected results would suggest that higher borrowing costs and inflation are discouraging Americans from spending. This then translates to lower growth prospects and possibly another stock market selloff.
Forex Setup of the Week: USD/CHF
With the spotlight on the U.S. economy this week, we might just see even bigger moves from the dollar pairs!
I’m looking at this one on USD/CHF in particular, as the pair is already closing in on the yearly highs just slightly past parity.Can hawkish FOMC minutes take it there? Or will mixed CPI and retail sales figures keep the pair in consolidation?
Moving averages are suggesting that more gains are in the cards, as the 100 SMA is safely above the 200 SMA on this daily time frame. Busting through the ceiling might set off an even steeper climb for USD/CHF.
On the other hand, Stochastic is already hanging out at the overbought region to signal exhaustion among buyers. Turning lower suggests that resistance could hold and take the pair back down to nearby support zones.
In any case, make sure you stay on your toes when trading this week’s major events!