Market Outlook for the Week of 30 October – 3 November

<p dir="ltr">The upcoming week is set to be eventful with a variety of data releases for the FX market.</p><p dir="ltr">On Tuesday, in Japan we are expecting the release of the BoJ Outlook Report, the BoJ Policy Rate, the Monetary Policy Statement and the Bank's press conference. Canada will unveil its m/m GDP data, while the United States will get the q/q Employment Cost Index and CB Consumer Confidence figures. In New Zealand, we expect the release of the Employment Change q/q data and the unemployment rate.</p><p dir="ltr">On Wednesday, RBNZ Governor Orr is scheduled to hold a press conference in Wellington, New Zealand, discussing the Financial Stability Report. In the U.S., we await data on the ADP Non-Farm Employment Change, the ISM Manufacturing PMI, JOLTS Job Openings, the Federal Funds Rate, the FOMC Statement and the FOMC Press Conference.</p><p dir="ltr">On Thursday, Switzerland will release the CPI data. In the United Kingdom, we are looking out for the BoE Monetary Policy Summary, the MPC Official Bank Rate Votes, the Official Bank Rate, a speech by BoE Governor Bailey and data on Unemployment Claims.</p><p dir="ltr">Friday will bring the Employment Change data and the unemployment rate in Canada. In the U.S., we'll receive data on Average Hourly Earnings m/m, Non-Farm Employment Change, the Unemployment Rate and the ISM Services PMI.</p><p dir="ltr">Additionally, Switzerland's SNB Chairman Jordan is expected to speak at the SNB and its Watchers Conference in Bern. The week ahead promises a wide range of economic data and significant central bank activities that can have a notable impact on financial markets.During the upcoming BoJ meeting this week, it is widely anticipated that the monetary policy will remain unchanged. Nevertheless, some analysts believe there might be adjustments related to the YCC with a potential change in forward guidance. Another crucial focus of this meeting will be the BoJ's quarterly outlook on both economic growth and inflation. Analysts at ING suggest that if the BoJ revises its inflation forecast for the next year to over 2%, the market is likely to interpret it as a move toward policy normalization.</p><p dir="ltr">The Canadian GDP m/m is likely to rise from 0.0% to 0.1%, while the U.S. employment cost index q/q is expected to remain unchanged at 1.0%. The U.S. CB Consumer Confidence is anticipated to drop from 103.0 to 100.1. </p><p dir="ltr">In New Zealand, the consensus for the employment change q/q is a drop from 1.0% to 0.4% while the unemployment rate is expected to rise from 3.6% to 3.9%. The RBNZ monetary policy will likely put pressure on employment growth in Q3 and make the unemployment rate grow.</p><p dir="ltr">RBNZ Gov Orr is due to hold a press conference about the Financial Stability Report in Wellington on Wednesday. It's worth keeping an eye on it in case he reveals anything new about monetary policy plans. In Switzerland, SNB Chairman Jordan will speak at the SNB Watchers Conference in Bern.</p><p dir="ltr">The most awaited event of the week is the FOMC meeting with the consensus for a no change in monetary policy and to maintain the federal funds rate at 5.25%-5.50%. Since the last meeting the GDP data for the U.S. reflected that the economy is still resilient, but for the moment the Fed will want to wait to see what happens next. The Fed will likely keep the door open for an additional 25bps rate hike as many of the policymakers stressed at the September meeting. However, many analysts argue the tightening cycle has peaked another 25bps rate hike is possible until the end of the year. The most anticipated event of the week is the forthcoming FOMC meeting. The prevailing consensus suggests that there will be no changes in monetary policy, with the federal funds rate set to be maintained at 5.25%-5.50%. Despite data indicating the U.S. economy's continued resilience since the previous meeting, the Federal Reserve is most likely to adopt a wait-and-see approach for the time being.</p><p dir="ltr">The Fed is expected to leave room for the possibility of an additional 25bps rate hike, echoing sentiments expressed by many policymakers during the September meeting. Even though several analysts believe that the tightening cycle has reached its peak, another 25bps rate hike is not off the table until the end of the year.</p><p dir="ltr">The Swiss inflation is likely to rise to 1.8% from 1.7% y/y and to 0.1% from -0.1% m/m. This is in line with the SNB's target so won't have much impact on the CHF.</p><p dir="ltr">At this week's meeting the BoE is widely expected to keep rates on hold at 5.25% and adopt a hawkish tone to stress that inflation is too elevated compared with its target. The Bank is likely to reiterate that further tightening might be appropriate if the inflation remains persistent. </p><p dir="ltr">In Canada, the consensus for the employment change is a drop from 63.8K to 24.6K. The unemployment rate is expected to rise from 5.5% to 5.6%. Analysts at Citi point out that due to population growth it's likely to see an increase in unemployment if the participation rate remains unchanged. One important aspect to watch for in this report will be wage growth which printed solidly in recent months and can provide hints about an additional rate hike from the BoC as the Bank previously stressed that a wage growth of 4-5% is too strong.</p><p dir="ltr">In the U.S., the average hourly earnings are forecasted to rise by 0.3% compared to the prior 0.2%. The Non-Farm Employment change is expected to drop from 336K to 182K and the unemployment rate to remain unchanged at 3.8%. Despite last month's strong non-farm employment change data, according to Wells Fargo, the labor market is overall showing signs of cooling down.</p><p dir="ltr">The U.S. ISM Services PMI is expected to drop from 53.6 to 53.2, but will remain in expansionary territory. This means there is still some strength in the services sector, but there is a possibility that in the near future the consumption of goods and services will slow down a bit. The ISM Manufacturing PMI is likely to remain unchanged at 49.0. However due to the Q3 growth in demand for goods it's possible to see a small rise in this week's data, but not a major deviation from the consensus. </p><p dir="ltr">This article was written by Gina Constantin.</p>

This article was written by FL Contributors at www.forexlive.com.