The Week Ahead 23rd – 27th October: Is the ECB’s October 26th interest rate decision the end of rate hikes?

<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 19, 2023. 11:00 GMT</strong></p>
<p><img decoding="async" fetchpriority="high" class="alignnone wp-image-26404 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/currencypairperformance-1.png" alt="" width="904" height="412" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/currencypairperformance-1.png 904w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/currencypairperformance-1-300×137.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/currencypairperformance-1-768×350.png 768w" sizes="(max-width: 904px) 100vw, 904px" /></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>The Israel-Hamas conflict escalated.</strong> Tensions in the Middle East intensified. US President Biden visited Israel, but a Summit with Biden in Jordan was canceled, suggesting a diplomatic solution will be hard to reach.</p>
<p><strong>Goldman Sachs profits dropped 36%.</strong> The banks’ earnings fell for an eighth consecutive quarter, although investment banking revenues rose for the first time in two years.</p>
<p><strong>Netflix jumped 12% after earnings.</strong> The streaming giant’s password crackdown boosted subscriptions to 8.8 million, ahead of 6.6 million expected. It also announced price hikes.</p>
<p><strong>Tesla missed Q3 forecasts.</strong> The EV maker posted EPS of $0.66 vs $0.74 forecast and a 37% decline in adjusted net income of $2.3 billion against $2.56 billion expected as price cuts hit margins.</p>
<p><strong>US treasury yields hit a new 16-year high.</strong> Stronger than expected US retail sales, industrial output, and hawkish Fed comments boosted the US 10-year treasury yield towards 5%.</p>
<p><strong>Gold rose to a 6-week high.</strong> The precious metal has risen over $100 per ounce since the start of the Israel-Hamas conflict on safe-haven flows.</p>
<p><strong>UK inflation remained sticky.</strong> UK CPI unexpectedly remained unchanged in September at 6.7%, defying expectations of a tick lower to 6.8%.</p>
<p><strong>Brent spiked over $90 per barrel.</strong> Oil prices rose across the week on concerns that the Israel-Hamas conflict could widen, pulling in oil-rich nations. Iran called on OPEC to place an oil embargo on Israel.</p>
<p><strong>United Airlines fell 9%.</strong> Aviation stocks across the board fell sharply on concerns over higher oil prices and as some flights have stopped to Tel Aviv.</p>
<p><strong>China’s GDP beat forecasts</strong>. The world’s second-largest economy saw Q3 GDP rise 1.3% QoQ in Q3, up from 0.5% in Q2, owing to stimulus support measures from Beijing.</p>
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<h2>Chart of the Week</h2>
<p><img decoding="async" class="alignnone wp-image-26407 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/chartoftheweek-2.png" alt="" width="786" height="430" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/chartoftheweek-2.png 786w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/chartoftheweek-2-300×164.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/chartoftheweek-2-768×420.png 768w" sizes="(max-width: 786px) 100vw, 786px" /></p>
<p>Gold is adding to last week’s 5% gains, pushing higher for a second week on safe-haven flows despite treasury yields hitting a 16-year high.</p>
<p>At the time of writing, hopes of a diplomatic solution in Gaza are fading as the Israel – Hamas conflict escalates. Gold rose above its 200 sma and reached an 11-week high of $1960. The precious metal has risen over $100 per ounce since the start of the Middle East crisis.</p>
<p>Despite rising yields and a stronger USD over the past week, Gold’s resilience is a testament to the geopolitical backdrop.</p>
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<h2>5 Things to Watch This Week</h2>
<p><strong>1. Middle East conflict</strong><br />
The markets will continue watching the conflict in the Middle East closely amid fears that it could escalate and drag in other countries in the Middle East, particularly oil-rich nations. Any sense that the conflict is intensifying and that the oil supply could be affected could lift the risk premium on WTI and Brent and boost the haven flows toward gold.</p>
<p><strong>2. ECB rate decision</strong><br />
The ECB We announce its interest rate decision on Thursday, the 26th of October. The meeting comes after the ECB raised interest rates by 25 basis points in the September meeting and hinted that was the last rate hike of the cycle. Recent speeches by ECB officials combined with cooling inflation and weak economic data have supported the view that the central bank is at the end of its rate-hiking cycle. However, oil prices have spiked sharply, and investors will watch closely to see whether this changes the central bank’s stance.</p>
<p><strong>3. BoC rate decision</strong><br />
The BOC will announce its rate decision on Wednesday, the 25th of October. Cooling inflation has fueled bets that the central bank will not hike interest rates at the October meeting. Money markets are just pricing in a 16% probability of a rate hike this month, down from over 40%. A third-quarter survey by the Bank of Canada also showed that businesses are gloomy about the economy’s outlook. However, it’s also worth noting that BoC governor Tiff Macklem warned that the fight against inflation hasn’t been won and that the central bank won’t rule out higher rates amid rising political risks.</p>
<p><strong>4. Big Tech earnings</strong><br />
This week sees some of the largest publicly listed companies in the world report. Microsoft, Alphabet, Meta, Amazon, and Apple are all due to release quarterly figures, and all five companies are expected to grow headline earnings. However, some will grow faster than others, boosted by cost-cutting efforts, resilient growth, and new AI prospects. The strongest earnings growth is expected at Meta and Amazon, while Apple is expected to see the weakest earnings growth.</p>
<p><strong>5. European banks’ earnings</strong><br />
Banks in Europe and the UK will release Q3 results. Investors will be watching Net Interest Marrgins NIM, the difference between the interest income generated by banks and interest paid out by lenders. Shrinking NIM is a warning sign for profitability. With central banks at or near peak rates, the outlook for NIM could fade. International banks such as HSBC and Standard Chartered could fare better.</p>
<h2>Economic Calendar Highlights</h2>
<h2><img decoding="async" class="alignnone wp-image-26410 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/economiccalendar1.png" alt="" width="904" height="464" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/economiccalendar1.png 904w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/economiccalendar1-300×154.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/economiccalendar1-768×394.png 768w" sizes="(max-width: 904px) 100vw, 904px" /></h2>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-26413 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/economiccalendar2.png" alt="" width="904" height="512" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/economiccalendar2.png 904w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/economiccalendar2-300×170.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/economiccalendar2-768×435.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-26416 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/eurusd.png" alt="" width="1916" height="867" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/eurusd.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/eurusd-300×136.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/eurusd-1024×463.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/eurusd-768×348.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/eurusd-1536×695.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p>EUR/USD is in a downtrend, making equal highs and lows below the 50 SMA. RSI is neutral, around 50. Price is consolidating in a roughly 1.05-1.06 range. A break and close above this range would confirm a weekly hammer pattern off long-term support</p>
<p><strong>GBP/USD (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-26419 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/gbpusd-1.png" alt="" width="1916" height="867" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/gbpusd-1.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/gbpusd-1-300×136.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/gbpusd-1-1024×463.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/gbpusd-1-768×348.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/gbpusd-1-1536×695.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p>GBP/USD is in a correction within a downtrend, forming higher lows and higher highs beneath the 50 SMA. RSI is neutral, around 50. The hammer on the weekly candle chart is bullish, but the trend remains down, implying the current sideways action resolves lower.</p>
<p><strong>USD/JPY (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-26423 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/usdjpy-1.png" alt="" width="1916" height="867" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/usdjpy-1.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/usdjpy-1-300×136.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/usdjpy-1-1024×463.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/usdjpy-1-768×348.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/usdjpy-1-1536×695.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p>USD/JPY is in an uptrend, making higher highs and lows above the 50 SMA. RSI is bullish but not overbought, 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-26426 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xauusd-1.png" alt="" width="1916" height="867" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xauusd-1.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xauusd-1-300×136.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xauusd-1-1024×463.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xauusd-1-768×348.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xauusd-1-1536×695.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p>XAU/USD is in an uptrend, forming higher highs and lows above the 50 SMA. RSI is overbought above 65. Price has put in a massive rally off the low at 1810 and has now broken resistance at 1950. Bigger picture, the price action is sideways, implying another reversal lower soon, but perhaps not under 1850.</p>
<p><strong>Brent Oil (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-26429 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xbrent-1.png" alt="" width="1916" height="867" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xbrent-1.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xbrent-1-300×136.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xbrent-1-1024×463.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xbrent-1-768×348.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xbrent-1-1536×695.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p>XBRENT is in a new uptrend, making higher lows and highs above the 50 SMA. RSI is neutral above 50. The moving average is near term support after the break back above it and retest. A retest of the highs at 95 looks likely.</p>
<p><strong>US500 (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-26432 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xus500-1.png" alt="" width="1916" height="867" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xus500-1.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xus500-1-300×136.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xus500-1-1024×463.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xus500-1-768×348.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/xus500-1-1536×695.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p>XUS500 is in the correction of a downtrend, making higher lows and highs under the 50 SMA. RSI is neutral. Price is in a choppy range of 4300-4400. A break back over the 50 SMA in line with the major uptrend seems most likely but a break lower could signify a much bigger decline towards 4000.</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-23rd-27th-october-is-the-ecbs-october-26th-interest-rate-decision-the-end-of-rate-hikes-26403/">The Week Ahead 23rd – 27th October: Is the ECB’s October 26th interest rate decision the end of rate hikes?</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>