March 26, 2023
Weekly Outlook, 7-11 November
Hot Forex Review
Weekly Outlook

Weekly Outlook, 7-11 November

Economic data and US election

After publishing most of the earnings reports, the employment report, and the Fed meeting, we realized that the economic condition in the US is not bad, but a soft downward is started. In the week ahead, inflation fears, and speakers from Fed and other major central banks, in line with the US midterm Congressional election, will be the main data and events to be watched.

1- Central banks’ speakers – Across the week

As mentioned earlier, these speeches will be very important, because they are going to give us more information about the decided policies and what we have to expect in the following meetings. German Buba President Nagel, SNB Board Members Maechler, SNB Chairman Jordan, and FOMC Member Mester will Speak on Tuesday. FOMC Member Williams, RBA Assist Governor Bullock, and MPC Member Haskel will speak on Wednesday. On Thursday, Ramsden & Tenreyro from Bank of England MPC and FOMC Members Mester and George will give a speech.

2- US Congressional Elections – Tuesday

On November 8, we will have the US mid-term congressional elections, where all 435 seats in the House of Representatives and 35 of the 100 seats in the Senate, will be contested. The importance of this election is its extent. Along with the congress and Senates, thirty-nine state and territorial gubernatorial elections and numerous other state and local elections also will be contested. The results will determine the 118th United States Congress members. 

3- US inflation – Thursday

On the busiest day of the economic calendar in the week ahead, US inflation numbers are again supposed to create another wave in the market. Headline CPI number is expected to decline to 8% in October, while monthly inflation is supposed to increase by 0.7%. High gasoline and food prices are the main inflation drivers at the moment. We expect the same change for the core inflation. The annual Core CPI number is expected to decline to 6.5%, but concerns remained uncomfortably high with a 0.5% monthly increase.

4- UK Q3 GDP – Friday

The UK economy is in recession, and it is expected to continue through 2024. UK inflation and BoE policies to control inflation could create one of the most severe recessions to materialize in the coming years. We expect to see the UK economy contract by 0.5% in Q3 to confirm that the recession officially started. With these expected data and economic conditions, market participants estimate a more gradual pace of tightening policies, and depreciation pressures on the pound are likely to persist for upcoming months.

5- Michigan Consumer Sentiment – Friday

Even if last month’s headline sentiment index increased to surprise us, and while some analysts expect another surprise in November, the consensus forecast is for a slight 0.3 decrease, leaving sentiment at a historically low 59.6. Consumer sentiment directly depends on expected inflation, which last month increased again from 4.7% to 5% for 2023. While Fed’s four consecutive 75 bps rate hikes somehow eased the inflation concerns, less hawkish decisions in the next meetings can reverse this path. Higher numbers will increase the US dollar and vice-versa.

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