Central banks and Employment data
Market analyst – IFC Markets
After Canada, Eurozone, and Japan, now it is time for Central banks in the United States, United Kingdom, and Australia to have their monetary policy meeting and interest rate decisions. While rising inflation, supply chain disruptions, and slowing economies are the current concerns all across the markets, these meetings and their decisions will be so important. At the same time, we have ongoing earnings reports and many other economic data, like ADP, NFP, and PMI numbers. Let's check them out together.
#1- Chinese PMI numbers – Monday
After weakness in Retail sales and shocking GDP growth in the third quarter, now PMI numbers will give us more data and information on how the second global economy is recovering from the latest COVID-related restrictions, and regulations introduced by authorities in recent months. With all these weaknesses, still, we are waiting for economic improvement by 8% at 2021. Therefore, with the very slow increase, still, we are waiting for an increase in both Manufacturing and Service sectors in October as well, as it was in September. With these expected data, the Chinese Yen, still holding its stronger position against the US dollar.
#2- Monetary policy meeting and interest rate decision in Australia – Tuesday
After much better than expected Retails sales numbers and a sharp increase of short-term bond yields, we can expect the interest rate hikes even earlier than previous expectations. With Hawkish decisions in Canada and Mrs. Lagarde confessing about the higher inflation for a longer time, it is not far-fetched to expect similar policies in Australia. This Hawkish expected tone from RBA, supposed to help the Aussie against its crosses.
#3- FOMC meeting - Tuesday & Wednesday
The market already priced in tapering with at least $15bln monthly with ending the plan at the middle of 2022 and expecting to be announced officially in this week. On the interest rate front, the market will focus on the details like the numbers of voters for the rate hike against holding rate policy, and the FED outlook about the inflation and labor market, mostly in the announcement and Mr. Powell's speech. As the market is expecting to have a hawkish tone from the FOMC meeting, it is expected to see the US dollar Index increasing after ending the two-day meeting on Wednesday.
#4- BoE Meeting - Thursday
In the past weeks, with increasing inflation and acceptable economic recovery, some monetary policy committee members of the Bank of England, including Governor Bailey were talking about the necessity of action by this bank, now investors counting on 15 basic points interest rate increase. But most financial market analysts are expecting that rates to behold for now and see the raise, at the beginning of 2022. At the same time, we need to focus on the economic outlook and BoE expected for GDP and inflation. Hawkish decisions will lift the Pound in the forex market, while any dovish or less hawkish policies will put it under pressure.
#5- US Employment data - Friday
Like every first Friday of the first week of each month, we will have the US monthly Non-Farm employment numbers. Payrolls increased by 194K last month and missed the estimates. On the other hand, the unemployment rate has eased by 1.1% in the past three months. For October, we are waiting to see the unemployment level ease to 4.7%, with 380K created jobs. After mid-week expected Hawkish policies by the Federal Reserve, Stock Markets can ease. And these positive data, are expected to support the leading US indices including Dow Jones industrial average, after the weakness at the beginning of the week.
