USD/CNH in focus with lots of data to come
The USD/CNH has been consolidating near the previous year’s high of 7.3450. But over the next week or so, there will be lots of key data releases from both the US and China to move this pair decisively. The key support level to watch is at 7.2700. A break below this level is needed to ignite some real selling pressure.
FOMC meetings minutes
Wednesday, October 11
The Fed’s hawkish pause last month sent the dollar surging higher alongside bond yields. At that meeting, the FOMC trimmed their interest rate cut projections in 2024 from 4 to just 2 and left open the possibility of one more rate increase before the end of 2023. As a result, the market was forced to revise higher its prior dovish expectations. The minutes of that meeting will reveal more insights into the Fed’s thinking and thereby help to fine-tune market’s expectations.
US CPI
Thursday, October 12
The market appears convinced that the Fed’s tightening cycle is over, but equally they are not expecting any rate cuts any time soon. This is because macro indicators in the US have remained relatively upbeat compared to the rest of the world. The dollar bulls will be looking for further evidence in incoming data, such as Thursday’s CPI print, to support the Fed’s view in keep rates high for long. Last month, CPI surprised to the upside, rising to 3.7% from 3.2%, ending a 14-month run of falling price pressures. But if there’s renewed weakness observed in CPI then this could provide relief for major FX pairs and gold.
UoM Consumer Sentiment
Friday, October 15
Since the middle of last year, consumer sentiment has generally been improving despite borrowing costs continuing to rise and price pressures remaining elevated. In more recent weeks, concerns over interest rates remaining high for longer in the US has caused lots of volatility in across financial markets. We have seen a sharp sell-off in stocks while bond yields have hit levels last seen before the global financial crisis. If these concerns filter through to the consumer, then spending is likely to fall on no-essential items, potentially causing the economy to come to a standstill. The UoM survey will give us an advanced indication on the front.
US retail sales
Tuesday, October 17
Us retail sales have held up relatively well in recent months, despite borrowing costs continuing to rise and price pressures remaining elevated. Concerns over interest rates remaining high for longer in the US was intense in September, but not so much in October so far with equity markets staging a bit of a recovery. Can retail sales and industrial production data (that will be released on the same day) ignite those concerns again? However, it is likely that spending is likely to fall on non-essential items, potentially causing the economy to come to a standstill in the months ahead.
Chinese GDP
Wednesday, October 18
As well as GDP, we will have industrial production and retail sales data to look forward to from the world’s second largest economy on Wednesday. Concerns over China’s struggling economy has been a key theme for much of the year, which has held back the local stock markets and the yuan, as well as some commodity prices like copper. But will we start to see some signs of stabilisation in data to arrest the underperformance of Chinese assets?
Written by Fawad Razaqzada, market analyst at FOREX.com
FOMC meetings minutes
Wednesday, October 11
The Fed’s hawkish pause last month sent the dollar surging higher alongside bond yields. At that meeting, the FOMC trimmed their interest rate cut projections in 2024 from 4 to just 2 and left open the possibility of one more rate increase before the end of 2023. As a result, the market was forced to revise higher its prior dovish expectations. The minutes of that meeting will reveal more insights into the Fed’s thinking and thereby help to fine-tune market’s expectations.
US CPI
Thursday, October 12
The market appears convinced that the Fed’s tightening cycle is over, but equally they are not expecting any rate cuts any time soon. This is because macro indicators in the US have remained relatively upbeat compared to the rest of the world. The dollar bulls will be looking for further evidence in incoming data, such as Thursday’s CPI print, to support the Fed’s view in keep rates high for long. Last month, CPI surprised to the upside, rising to 3.7% from 3.2%, ending a 14-month run of falling price pressures. But if there’s renewed weakness observed in CPI then this could provide relief for major FX pairs and gold.
UoM Consumer Sentiment
Friday, October 15
Since the middle of last year, consumer sentiment has generally been improving despite borrowing costs continuing to rise and price pressures remaining elevated. In more recent weeks, concerns over interest rates remaining high for longer in the US has caused lots of volatility in across financial markets. We have seen a sharp sell-off in stocks while bond yields have hit levels last seen before the global financial crisis. If these concerns filter through to the consumer, then spending is likely to fall on no-essential items, potentially causing the economy to come to a standstill. The UoM survey will give us an advanced indication on the front.
US retail sales
Tuesday, October 17
Us retail sales have held up relatively well in recent months, despite borrowing costs continuing to rise and price pressures remaining elevated. Concerns over interest rates remaining high for longer in the US was intense in September, but not so much in October so far with equity markets staging a bit of a recovery. Can retail sales and industrial production data (that will be released on the same day) ignite those concerns again? However, it is likely that spending is likely to fall on non-essential items, potentially causing the economy to come to a standstill in the months ahead.
Chinese GDP
Wednesday, October 18
As well as GDP, we will have industrial production and retail sales data to look forward to from the world’s second largest economy on Wednesday. Concerns over China’s struggling economy has been a key theme for much of the year, which has held back the local stock markets and the yuan, as well as some commodity prices like copper. But will we start to see some signs of stabilisation in data to arrest the underperformance of Chinese assets?
Written by Fawad Razaqzada, market analyst at FOREX.com