The week ahead starts with a holiday – Columbus Day in the United States and Spain’s national day. In other words, expect slow markets and price action to dominate the day as liquidity is not there.
Moreover, considering the moment during the trading month (i.e., middle of the month), the chances are that Monday’s price action will also extend to the other days in the trading week.
Economic Data to Watch This Week
Bank of England’s Governor speaks on Monday at a Citizen’s Panel Open Forum hosted by the Bank of England. The GBP will likely be the star of the week in terms of liquidity, as the Brexit negotiations enter a straight line.
Claimant Count Change from the United Kingdom and the CPI (Consumer Price Index) from the United States will dictate the price action on Tuesday. However, do not expect much of a movement on the GBPUSD due to the two economic releases, as the market focuses on the bigger, more important events – Brexit and the U.S. elections.
Wednesday, the Core PPI in the United States completes the inflationary picture. By now, the market participants already have a clue about the change in prices at the consumer level, and this piece of information completes the inflation analysis.
Australian employment on Thursday and Core Retail Sales in the United States on Friday completes a week that is likely to bring more ranges. As mentioned earlier, the focus sits with the bigger picture, and any positioning this week will have in mind the main events for the rest of the trading year.
Three events have the potential to move the markets in the months before the year’s end. First, the U.S. elections. The race is tight as always, with both Republicans and Democrats hoping to win the White House and the Congress. Depending on who is winning, the USD is expected to react in the short to medium term.
Second, Brexit is still a thing, and the GBP’s volatility is on the rise every time there is something new on the deck. Here, expect the 1.30 level on the GBPUSD to act as a pivotal level moving forward.
Finally, the ECB is expected to ease more this year. We do not know the size of the ECB “bazooka” yet, but judging by what the market expects, it should be big enough to matter for the EURUSD.