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Forex »Next week from October 17 to 22, 2021

Will the risk persist if there is stronger economic data this week?

The past week has been quiet about news leaving the financial and forex markets on their own to act without an obvious catalyst.

The past week has been quiet on the news, and markets have been forced to fend for themselves without an obvious catalyst. As the talks focused on higher inflation in the United States and higher bank profits, the markets seemed to sideline them and buy “risky” assets. Is a reduction announcement taken into account in November? One of these risk assets was the Bitcoin, which is approaching record highs. This week, the theme is expected to continue, with inflation data from New Zealand, UK, Canada and Japan, as well as global Flash PMIs. There will also be a data dump on Monday from China. The earnings season continues as FAANG briefs the Prime Minister, NFLX, along with other big names like JNJ, TSLA, T, BX, INTC, and SNAP. Traders will be on the lookout for forecast revisions.

US CPI for September (YoY) was 5.4% versus an August print of 5.3%. This is the highest level in 13 years. The US PPI for September (year-on-year) was 8.6% compared to 8.3% in August, its highest level since the Great Financial Crisis. It is not very often that we write about weekly data from initial jobless claims. However, for the week ending October 2, initial jobless claims fell below 300,000 for the first time since the pandemic began in the United States in March 2020. Circulation was 293,000. US retail sales prices were 0.7% versus an expectation of -0.2%. and an upward revision of the August printing to 0.9%.

This data allows the Fed to announce a cut at its November 3 meeting. Many people even talk about the dreaded S-word, “stagflation.” Incidentally, the Fed minutes were also released last week. And in addition to Powell saying the cut could take place in mid-2022, the minutes showed there was talk of cutting $ 15 billion a month from mid-November to mid-December. Additionally, bank earnings were exceptional with MS, C, BAC and GS exceeding all estimates due to investment banking deals and a release of cash that was in reserve for bad debts during Covid.

With the stronger US data from last week, traders can expect the selling risk to be reduced as the decline could occur in the near future. However, the funds were tapped as the DJIA rose more than 1.5%, the S&P 500 more than 1.75%, the NASDAQ almost 2% and the Russell 2000 almost 2.4%. Also, Bitcoin, considered a risk asset and definitely considered a volatile asset, was up over 12.5% ​​last week and over 43% in the last 3 weeks! Meanwhile, commodity currencies moved calmly with Bitcoin last week, as currencies such as the Austrian dollar, the Canadian dollar, and the Russian ruble were higher as well. See here how you can trade Bitcoin using foreign currencies. Will the change to risk continue this week?

Reporting on corporate results will take center stage this week. Will profits be better than expected, like American banks last week? Will the future orientation be adjusted? Stock market traders will be watching the answers to these questions. Some of the most popular trade names releasing revenue this week are: UAL, BK, HAL, PG, PM, NFLX, JNJ, BIIB, VZ, TSLA, ABT, T, BX, INTC, SNAP, SAP, AXP, HON

Also, the economic calendar posts are moving away from the United States this week. Inflation data will be released for New Zealand, Germany, the euro area, Canada and Japan. Will rising inflation continue to push funds into risky assets, or will traders fear a reduction in central bank risk reduction? In addition, China publishes the GDP for the third quarter, industrial production, retail sales and the unemployment rate for September. Traders will be vigilant if evidence of a slowdown in China continues. Other notable economic data releases are as follows:

Sunday – October 17, 2021

New Zealand: CPI (third quarter)
China: GDP growth rate (third quarter)
China: Industrial Production (SEP)
China: Retail Sales (SEP)
China: Unemployment Rate (SEP)

Monday – October 18, 2021

Canada: Housing Initiatives (SEP)
United States: Industrial Production (SEP)
United States: Manufacturing Production (SEP)
United States: NAHB Housing Market Index (OCT)
Canada: Business Outlook Survey Indicator (Q3)
Australia: minutes of the RBA meeting

Tuesday – October 19, 2021

United States: Housing Initiatives (SEP)
United States: Building Permit (SEP)
Japan: Trade Balance (SEP)
China: House Price Index (SEP)

Wednesday – October 20, 2021

Germany: PPI (SEP)
United Kingdom: inflation data (SEP)
Euro zone: final inflation rate (SEP)
Canada: inflation rate (SEP)
United States: crude stocks

Thursday – October 21, 2021

UK: CBI Business Optimism Index (Q4)
UK: CBI Industrial Trends Orders (OCT)
Canada: New Home Price Index (PSE)
United States: Philadelphia Fed Manufacturing Index (OCT)
EU: Flash on Consumer Confidence (OCT)
United States: Existing Home Sales (SEP)
Global: Manufacturing and Service PMI Blinks (OCT)
Japan: inflation rate (SEP)

Friday – October 22, 2021

UK: Retail Sales (SEP)
Canada: Retail Sales (AUGUST)
Canada: Manufacturing Sales Prel (SEP)

Watch ” ECONOMIC CALENDAR

Chart of the Week: Weekly Copper

Source: Tradingview, Stone X

With last week’s risk mode, commodities are also up for an offer. As a result, copper has had one of its best weeks! The industrial metal closed last week near 10.5%, breaking a correction channel and testing highs for the week of May 10 near 4.8857. If the risk theme continues into the next week (Chinese data could play a role), copper could keep rising. The first resistance on the weekly calendar is at 4.8857, then the Fibonacci extensions of 127.2% and 161.8% from the highs of the week of May 10 to the lows of the week of August 16 at 5.1579 and 5.4587, respectively. Support is at an ascending trend line going back to March 2020, then the descending trend line of the correction channel near 4.4688. After that, there is the 50-week moving average at 4.0756 and the August 16 weekly low at 3.9585.

With more inflation data released this week around the world, it will be interesting to see if traders continue the risk issue if the data is higher than expected. However, if earnings reports are weaker or the forecast is revised downward, there may be some volatility in the currency and financial markets. Flows can switch to risk-free mode!

By Joe Perry, Forex.com » Official site

Disclaimer: The information and opinions contained in this report are provided for general information only and do not constitute an offer or solicitation regarding the purchase or sale of currency exchange contracts or CFDs. Although the information contained in this document has been taken from sources considered reliable, the author does not guarantee its accuracy or completeness, and does not assume responsibility for any direct, indirect or consequential damages that may result from the fact that someone trusts such information.

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