The release of the FOMC minutes might be the main event on the forex calendar, but Q3 earnings reports would likely impact overall sentiment.
Read on to see what market watchers are expecting.
Don’t forget to review which factors drove forex market price action last week, too!
Major Economic Events:
ZEW economic sentiment (Oct. 12, 9:00 am GMT) – Germany and the entire eurozone are scheduled to release the results of the ZEW economic sentiment survey for October.
Another set of declines is eyed, with the German reading slated to fall from 31.1 to 26.5 and the aggregate figure likely to drop from 26.5 to 20.4. These would reflect weaker optimism among investors.
Also, keep in mind that the actual figures have been falling short of estimates in the past four months.
U.S. CPI (Oct. 13, 12:30 pm GMT) – Another 0.3% uptick in headline inflation is eyed while the core figure could post a slightly stronger 0.2% increase for September, following the earlier 0.1% increase.
These might not have much of an impact on dollar movements, though, as traders have already gotten wind of the core PCE price index and might still be reeling from the downbeat NFP. Besides, dollar traders might hold out for the release of the FOMC minutes a few hours later.
FOMC meeting minutes (Oct. 13, 6:00 pm GMT) – In their latest monetary policy statement, the Fed more or less confirmed that tapering is happening before the year comes to a close.
The updated dot plot forecast of interest rates also suggested that a rate hike in mid-2022 is possible. With that, the transcript of their huddle might contain plenty of hawkish remarks that could keep traders hopeful that tightening is coming soon.
Australian employment report (Oct. 14, 12:30 am GMT) – After printing a disappointing 146.3K loss in hiring for August, the Land Down Under might report another drop in employment of 135K for September.
This might be enough to bring the jobless rate up from 4.5% to 4.8% for the month, as lockdowns over the past months likely kept hiring activity limited.
U.S. retail sales (Oct. 15, 12:30 pm GMT) – After a pretty strong showing in August, consumer spending likely slowed in September.
Headline retail sales probably slipped by 0.3% after the earlier 0.7% gain while the core version of the report might print a meager 0.5% uptick after the previous 1.8% jump.
Still, stronger than expected results might be enough to assure dollar bulls that tapering could take place next month and that the consumer sector is strong enough to weather higher energy costs.
Forex Setup of the Week: AUD/USD
Apart from the FOMC minutes and U.S. data, earnings season might be a big driver of price action throughout the week.
That’s why I’m looking at this higher-yielding commodity currency versus the safe-haven Greenback!
AUD/USD is completing an inverted head and shoulders pattern on its 4-hour time frame, and price looks ready to bust through the neckline.
However, Stochastic is already indicating overbought conditions or exhaustion among buyers. Heading lower could mean that bearish pressure is picking up, so price might follow suit.
Also, the 100 SMA is below the 200 SMA to suggest that the path of least resistance is to the downside. Then again, AUD/USD has climbed above the 200 SMA dynamic inflection point as an early signal of a bullish takeover.
If Aussie bulls are able to charge, the pair could climb by the same height as the reversal formation or roughly 150 pips!
