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Analytics for a week (OCTOBER 14 - OCTOBER 18)

Euro \ dollar: Last week results and forecast for the upcoming period.

 

The euro / dollar rose again above the key resistance level of 1.1000 to around 1.1035. Further development of corrective growth depends on the ability of quotes to overcome the current area of ​​strong resistance.

In the coming weeks, the main factor in the foreign exchange market will be the Fed meeting, at which the regulator can reduce the interest rate. Against this background, the euro / dollar may continue to grow to local resistances 1.1100 and 1.1170.

According to Goldman Sachs analysts, the Federal Reserve will follow the example of the European Central Bank and will launch a new phase of the securities purchase program at the end of the year. Fed Chairman Jerome Powell announced the imminent expansion of the Central Bank’s assets last week. This step has not yet been taken into account by the markets at current prices, and therefore can lead to a significant drop in the dollar. Currently, investors estimate the probability of a rate cut at a meeting at the end of October at 85%. Another 40% believe that the Fed will lower the rate twice before the end of 2019. According to the minutes of the last meeting, Federal Reserve officials still disagree on how to proceed.

In the forecasts that accompanied the September statement, 7 out of 17 Fed board members indicated that they anticipate yet another rate cut this year. Five officials do not see the need for further cuts, and five more predict a rate hike by the end of 2019. Fed Chairman Powell refers to those who see the decline as a necessary safety net to support the expansion of the US economy. Powell reiterated last week that the central bank would act as necessary to support the country's economy.

Other Fed officials still do not see the need to cut rates amid moderate economic growth and unemployment at a 50-year low. Consumer price growth in the USA did not change in September and amounted to 1.7%. Core inflation also remained unchanged at 2.4%. US manufacturing activity has plummeted, and this could affect the decision of the Federal Reserve. The minutes of the meeting showed that officials as a whole began to worry more about trade risks and other constraints to the economy, such as a slowdown in global growth and uncertainty about Brexit. Some of them consider the additional rate cuts to be a protection against risks, while others believe that the current US economic outlook does not justify lower rates.

In our forecast for the coming week, we expect further growth of the euro / dollar to resistance levels of 1.1050, 1.1080, 1.1100, 1.1140 and 1.1170. With a high probability, correctional growth will end in the resistance area of ​​1.1170, and quotes will unfold to a new stage of decline.

 

Economic statistics next week.

In macroeconomic statistics coming out next week, the following indicators can be distinguished:

Monday

China will publish data on imports, exports and total trade balance.

In the Eurozone will come out indicators of industrial production. ECB Vice President Luis de Gindos and Bank of England Deputy Governor for Financial Stability, member of the Monetary Policy Committee, John Canliff, will make statements.


Tuesday

Australia will publish the minutes of the meeting of the Reserve Bank, which took place two weeks ago. China announces consumer price index and producer price index. In Japan, there will be data on industrial production and an index of activity in the service sector.

In Switzerland, the producer price index will become known. In the UK, a block of labor market data will be released, including: unemployment rate, number of applications for unemployment benefits and average salary. Also on Tuesday, Member of the Bank of England Monetary Policy Committee Gertyan Wlig will speak. In Germany, the index of sentiment in the business environment and an indicator for assessing the current economic conditions of the ZEW Institute will be published.

In the US, the Redbook retail sales index and the index of business activity in the manufacturing sector of the Federal Reserve Bank of New York will be released.


Wednesday

In New Zealand will publish the consumer price index. Australia will release the index of leading economic indicators Westpac.

In Italy, industrial production data will become known. The UK will publish the retail price index, the basic and basic indicators of producer and consumer prices. In the Eurozone will also come out indicators of growth in consumer inflation and the trade balance. Speaker of the ECB Board Member Philip Lane.

In the United States will publish data on retail sales, an economic review of the US Federal Reserve Beige Book and an indicator of the market value of housing NAHB. In Canada, data on rising consumer prices will be released. Lal Brainard, representative of the US Open Markets Committee, will deliver a speech. The American Petroleum Institute will provide data on oil reserves in the US last week.


Thursday

Deputy Head of the Reserve Bank of Australia Guy Debel will deliver a speech. Also, Australia will publish data on full and part-time employment and an index of confidence in the business environment of the National Bank.

In Switzerland, will publish indicators of import, export and the overall trade balance. In the UK, there will be retail sales data and a Bank of England report on loan conditions. In the Eurozone, the volume of production in the construction sector will become known

In the US, they publish housing data, the number of initial and repeated applications for unemployment benefits, industrial production and an indicator of business activity in the manufacturing sector of Philadelphia. In Canada, the volume of industrial supplies and the ADP employment report will be published. On this day, the head of the Federal Reserve Bank of San Francisco, John Williams, as well as a member of the Board of Governors of the Fed Michelle Bowman. The Energy Information Administration will present changes in US natural gas reserves last week.


Friday

Japan will publish a consumer price index and data on national and foreign investment in securities. In China, there will be data on retail sales, industrial production and GDP growth indicators for the third quarter of 2019.

In Germany, the wholesale price index will become known, and in the Eurozone, the current account balance.

In the United States, Fed Deputy Chairman Richard Clarida and Dallas Fed Chairman Robert Kaplan will make statements. Baker Hughes will post changes in the number of active rigs last week.