This week’s busy macroeconomic in the US with lots of first-tier data.
- EU growth is still slow at the start of Q4, the non-event ECB.
- EUR / USD Long-term ward upward correction is complete, ready to resume its downfall.
The EU / US pair have spent the last few days consolidating at the top end of the weekend, losing a week below 1.1100 levels. With fresh Greenback backing over the end of the week over continuous Brexit uncertainty, it reached 1.1179, the latest October maximum.
Economic downturn and non-event ECB
Data from Europe and the United States does not create a market reaction, as it confirms what investors already know. Early October market estimates on union production and services output indicated that the economic downturn had expanded to Q4. Those in the United States, somewhat improved, risked the scale in favor of the dollar.
The European Central Bank had a monetary policy meeting, but given the recent decision to increase stimulus by lowering rates and resuming bond-buying, it was a non-event. Accordingly, this was the last meeting chaired by Mario Draghi and he did not give any indication as to what his successor, Mrs. Christine Legard would do.
US Sustainable Goods orders declined 1.1% in September, while non-defense capital goods orders ex-aircraft saw a decrease of 0.5% after a 0.6% decline for the second consecutive month, as seen in the Business-Investment Expenditure Index. The latest US Federal Reserve rate boosted data concerns that the decline is not enough to guide the economy.
Busy week ahead
The US Federal Reserve held a monetary policy meeting next Wednesday, and the market is already setting prices at 25 bps. However, Powell & Co. may well refrain from acting, as one of the key arguments for the rate reduction was trade tensions between the United States and China. The progress of this front has been slow, but at this point, representatives of both countries have indicated a deal, cooling down the concerns. As for macroeconomic data, this is not indicative of strong economic progress but will be far from suggestive of contraction.
The coming days will also bring preliminary estimates for the previous Q3 Gross Domestic Product from the US, with forecasts up 2.5% to 6.6%. These figures will be released before the Fed’s decision, which may limit the response to market growth data.
On Friday, the U.S. will publish an October non-pay report on the US economy so that 105 new jobs are added, and the unemployment rate is up 3.6%.
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In the meantime, the EU will also release its Q3 GDP, the economy will grow by a slight 0.1%, and the initial inflation in October has increased by 0.7% EVE after advancing to 0.8% in the previous month.