The Week Ahead 16th – 20th October – Awaiting Next UK Inflation and Chinese GDP Data

<p>Welcome to Key To Markets preview of the Week Ahead</p>
<h2>Currency Pair Performance</h2>
<p>5-day performance as of <strong>October 12, 2023. 11:00 GMT</strong></p>
<p><img decoding="async" fetchpriority="high" class="alignnone wp-image-26255 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/currencypairperformance.png" alt="" width="894" height="422" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/currencypairperformance.png 894w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/currencypairperformance-300×142.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/currencypairperformance-768×363.png 768w" sizes="(max-width: 894px) 100vw, 894px" /></p>
<p>Source: finviz.com</p>
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<h2>10 Big Stories Last Week</h2>
<p>In case you missed it…</p>
<p><strong>Hamas militants attacked Israel.</strong> The attack initially sent oil prices 4% higher on fears of the conflict spreading to oil-rich nations. Saudi Arabia’s calming tone brought oil prices lower.</p>
<p><strong>Fed hints towards a dovish pivot.</strong> Several Fed officials adopted a more dovish tone in speeches this week, raising questions over whether the Fed will raise interest rates again.</p>
<p><strong>UK GDP returned to growth.</strong> The UK economy grew a lackluster 0.2% MoM in August, recovering from -0.6% contraction in July. The weak growth supports the view that the BoE may not hike again.</p>
<p><strong>IMF upwardly revised US GDP growth.</strong> The US economy is expected to grow 2.1% this year, a 0.3% upward revision from July. The IMF forecasts 1.5% growth in the US next year.</p>
<p><strong>Birkenstock IPO disappointed.</strong> The German sandal maker set its IPO price at $46 but closed its first day of trading at $40.20 amid weak demand and signs of the stock being overpriced.</p>
<p><strong>LVMH fell 7% as Q3 growth slowed.</strong> The luxury group posted revenue of €19.9 billion, up 8% YoY but down from a 17% rise in the preceding quarter, reflecting softer sales worldwide.</p>
<p><strong>PepsiCo rose after lifting guidance.</strong> The soft drink and beverages giant upwardly revised its profit forecast for a third time this year thanks to resilient demand and PepsiCo passing on price increases.</p>
<p><strong>Gold rose over 2.5%.</strong> Falling US treasury yields, a weaker USD, and safe haven flows lifted the precious metal to a two-week high.</p>
<p><strong>US inflation was hotter than expected in September.</strong> CPI rose 0.4% MoM last month, ahead of the 0.3% forecast. On an annual basis, CPI remained unchanged at 3.7%.</p>
<p><strong>EasyJet reinstated its dividend.</strong> The budget airline expects to report a rise in Q4 pre-tax profit and saw a record financial performance over the summer. A 10% of 10% of fiscal 2023’s pretax profit will be paid.</p>
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<h2>Chart of the Week</h2>
<p><img decoding="async" class="alignnone wp-image-26258 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/chartoftheweek-1.png" alt="" width="904" height="536" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/chartoftheweek-1.png 904w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/chartoftheweek-1-300×178.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/chartoftheweek-1-768×455.png 768w" sizes="(max-width: 904px) 100vw, 904px" /></p>
<p>Source:FactSet</p>
<p>Q3 earnings season is upon us, and expectations are less negative than for previous quarters. According to FactSet, revenue is expected to be around 1.7% higher compared to last year, if achieved, this will mark the 11th straight quarter of revenue growth. Earnings are expected to drop 0.3%, which would mark the 4th straight quarter of declines.</p>
<p>The bar has been set low this reporting season, which leaves room for upside surprises. Of the 21 firms that had reported at the time of writing, 18 had beaten estimates, which bodes well for the coming weeks.</p>
<p>Nine sectors are set to report year-on-year growth in revenue, with consumer discretionary leading the charge, while energy and materials are expected to post a revenue decline.</p>
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<h2>5 Things to Watch This Week</h2>
<p><strong>1. Netflix Q3 earnings</strong><br />
Netflix is due to release Q3 results on Wednesday, October 18th, after the market close. Expectations are for revenue to rise 7.7% year on year to 8.53 billion, while EPS is expected to rise 12.7% to $3.49. The results come as Netflix has expressed confidence in its financial outlook amid its successful implementation of its shared password crackdown and steady growth of its advertising revenue. The share price has risen by 25% year to date.</p>
<p><strong>2. Tesla Q3 earnings</strong><br />
Tesla is due to publish its Q3 earnings report on Wednesday, October 18th, after the market close. The results come after the EV maker reported disappointing Q3 deliveries, which were down 7% sequentially at 435,059 due to planned factory shutdowns, although this was 26% higher compared to last year. Wall Street expects Tesla’s revenue to come in at around $24.25 billion, up 11% across the year, and earnings are forecast to come in at $0.75 per share, down 25% from last year.</p>
<p><strong>3. UK CPI</strong><br />
UK inflation data is due to be released on Tuesday, October 17th. After unexpectedly falling to 6.7% YoY in August, down from 6.8% in July, investors will be watching to see whether the trend of cooling inflation continues. While CPI is down considerably from the record 11.1% in October 2022, a 41-year high, it is still significantly above the BoE’s 2% inflation target. The UK central bank left interest rates unchanged in the September meeting, and there are questions over whether the central bank will be able to raise interest rates again, given the deteriorating economic outlook. However, stronger-than-expected inflation could reignite bets of another BoE hike.</p>
<p><strong>4. China GDP</strong><br />
China’s GDP data is due to be released on Wednesday, October 18th, and is expected to show growth of 4.4% annually, down from 6.3% previously. However, growth is expected to rise 1% QoQ after rising 0.8% in Q2. The data comes amid mixed expectations for the Chinese economy, with the IMF downwardly revising GDP forecast for 2023. However, U.S. banks have started to raise China’s GDP forecast, with economists expecting growth of 5% for 2023, suggesting that the economic slowdown since April could be turning a corner.</p>
<p><strong>5. Proctor &amp; Gamble Q3 earnings</strong><br />
Procter and Gamble, the household consumer name, is due to report Q3 earnings on Wednesday, October 18th, ahead of the market opening. Expectations are for EPS of $1.72 on revenue of $21.63 billion. The results will be particularly in focus given the firm’s diverse product categories, which usually enable it to maintain stable demand regardless of the economic climate and often allow it to thrive in economically uncertain times. The big question will be to what extent the firm has managed to pass on price hikes.</p>
<h2>Economic Calendar Highlights</h2>
<p><img decoding="async" class="alignnone wp-image-26261 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/economiccalendar-1.png" alt="" width="904" height="676" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/economiccalendar-1.png 904w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/economiccalendar-1-300×224.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/economiccalendar-1-768×574.png 768w" sizes="(max-width: 904px) 100vw, 904px" /></p>
<p>Source: FXStreet.com</p>
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<h2>Technical Analysis:</h2>
<p>TA of the major asset classes (Forex – Commodities – Indices…).</p>
<p><strong>EUR/USD (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-26264 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/eurousd.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/eurousd.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/eurousd-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/eurousd-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/eurousd-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/eurousd-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/eurousd-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>EUR/USD is in a downtrend, making lower highs and lows below the 50 SMA. RSI is neutral, around 50. Price has formed a bearish engulfing candlestick off support- turned resistance at 1.063. A weekly hammer pattern off 1.05, long-term support offers the chance of a bullish reversal.</p>
<p><strong>GBP/USD (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-26267 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/gbpusd.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/gbpusd.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/gbpusd-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/gbpusd-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/gbpusd-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/gbpusd-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/gbpusd-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>GBP/USD is in a correction within a downtrend, forming lower lows and one higher high beneath the 50 SMA. RSI is neutral, around 50. A bearish engulfing candlestick off 1.233 mirrors the one in EURUSD, as does a hammer on the weekly candle chart.</p>
<p><strong>USD/JPY (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-26270 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/usdjpy.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/usdjpy.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/usdjpy-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/usdjpy-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/usdjpy-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/usdjpy-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/usdjpy-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>USD/JPY is in an uptrend, making higher highs and lows above the 50 SMA. RSI is neutral, around 60. The price is consolidating in a tight range under 150.0, hints at an eventual break higher, but a hanging man pattern on the weekly chart at a round number is bearish.</p>
<p><strong>Gold (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-26273 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xauusd.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xauusd.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xauusd-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xauusd-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xauusd-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xauusd-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xauusd-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>XAU/USD is in the correction of a downtrend, making lower lows and highs below the 50 SMA. RSI is neutral. The bullish engulfing pattern at 1810 brought on a rally back to support-turned-resistance at 1880.</p>
<p><strong>Brent Oil (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-26276 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xbrent.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xbrent.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xbrent-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xbrent-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xbrent-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xbrent-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xbrent-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>XBRENT is in a downtrend, making lower lows and highs below the 50 SMA. RSI is neutral. So far price has held above major support at 82 but another close under 85 would imply a move as low as 78.</p>
<p><strong>US500 (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-26279 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xus500.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xus500.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xus500-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xus500-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xus500-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xus500-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xus500-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>XUS500 is in the correction of a downtrend, making lower lows and one higher high under the 50 SMA. RSI is neutral. The aforementioned ‘piercing pattern’ has led to a rally up towards 4400, which coincides with a zone of support-turned-resistance from the June and August lows.</p>
<p>Thank you very much for reading – and have a great week trading!</p>
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<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/weekly-market-updates/the-week-ahead-16th-20th-october-awaiting-next-uk-inflation-and-chinese-gdp-data-26253/">The Week Ahead 16th – 20th October – Awaiting Next UK Inflation and Chinese GDP Data</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>