Weekly Market Outlook: FOMC and employment figures in focus
After last week’s disastrous US employment report, all eyes will be on this week’s US FOMC meeting minutes release from the Fed on Wednesday, along with US inflation figures and then US retail sales number on Friday. Traders have been positioning themselves for a smooth ride in the Fed tapering process but recent data has created a rocky path forward.
The Australian employment report will also be widely watched on Thursday. The AUD was one of the weakest currencies for many months over the Australia riots. Now that things have stabilised somewhat, the focus turns to the impact on its domestic economy.
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Weekly Forex Calendar
Source: Forex Calendar from the MetaTrader 5 trading platform provided by Admirals.
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Trader’s Radar – US FOMC, Inflation & Retail Sales
On Wednesday 13 October at 7 pm BST, the US Federal Reserve releases its latest FOMC meeting minutes report. This report details the insights into the financial and economic conditions that influence the bank's decision on monetary policy.
No changes are expected as the Fed has already announced they want to start the tapering process but are waiting for a stronger labour market. Last week’s US employment figures came out much worse than expected with only 194,000 jobs added to the economy last month versus an expected 490,000.
The language in the report can give more details on where the Fed’s red lines are so we could see some positioning based on last week’s data. It’s also why Wednesday's CPI (Consumer Price Inflation) report and Friday’s US retail sales number will also be a big deal.
Source: Admirals MetaTrader 5, USDX, Monthly - Data range: from 1 Aug 2013 to 10 Oct 2021, performed on 10 Oct 2021 at 7:00 pm GMT. Please note: Past performance is not a reliable indicator of future results.
The chart above shows the monthly price activity of the US Dollar Index. It’s clear to see the bounce higher from the recent horizontal support level around 89.13. This also happens to be the lower support zone of a long-term consolidation pattern.
Interestingly, the price has also broken through intermediate resistance as depicted by the small descending black line. Now that the bulls are above this resistance level there is space for the price to try and roam higher – possibly back to the top of the long-term consolidation pattern.
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Corporate Trading Updates and Stock Indices
Global stock market indices have continued to trade lower in recent weeks, although the moves have now been more muted. The energy crisis, inflation fears and rising tensions between the US and China and now the EU and UK have lowered the sentiment around risk.
Now that the momentum to the downside has slowed down, it is an opportunity for buyers to try and build. Analysing whether this is the case or not will be key to what the next big move could be, especially as we enter a traditionally seasonally bullish month from November.
Source: Admirals MetaTrader 5, SP500, Daily - Data range: from 8 Jan 2021 to 10 Oct 2021, performed on 10 Oct 2021 at 6:30 pm GMT. Please note: Past performance is not a reliable indicator of future results. Past five-year performance of the S&P 500: 2020 = +16.17%, 2019 = +29.09%, 2018 = -5.96%, 2017 = +19.08%, 2016 = +8.80
Currently, the price action of the S&P 500 stock market index shown above is battling between the 100-day exponential moving average (EMA), depicted by the green line, and the 50-day EMA, depicted by the red line.
These levels have provided technical support and resistance zones in the past and continue to do so now. Traders will be looking for the next clues on whether the price will continue to break lower or stage a rally.
Either way, it is setting up to be a very interesting week!
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