While this week was interesting as investors were offered US inflation and retail sales readings, it is nowhere near as interesting as the week ahead! Monetary policy from the Federal Reserve, Bank of Japan and Bank of England combined with releases of flash PMIs for September are likely to keep markets moving. Be sure to watch GOLD, GBPJPY and DE30 next week.
Recent data from the United States have been mixed. While non-farm payrolls missed expectations significantly, inflation remained high and retail sales data turned out to be much better than market expected. FOMC will announce a monetary policy decision this Wednesday at 7:00 pm BST. A point to note is that a new set of macroeconomic forecasts will be released as well and it may shed some light on whether tapering is coming this year or not. Gold price was negatively impacted by recent improvement in US data as taper concerns mounted and it is expected to become more volatile around policy announcement.
While the monetary policy decision from the US is a key event of the week, it is not the only decision scheduled for next week. Bank of Japan will announce its next move on Wednesday (3:00 am BST) while Bank of England will follow on Thursday (12:00 pm BST). Recent turmoil in Japanese politics is likely to encourage BoJ to stay on hold but BoE may be forced to provide an explanation for the latest surge in inflation. GBPJPY more or less followed moves of the equity markets this week but the pair will become more vulnerable to country-specific events in the week ahead.
Decisions from major central banks will likely have an impact not only on the gold and FX markets but also on the stock indices. However, equities will also get another opportunity to move on Thursday - release of flash PMIs for September from Europe and the United States. German reading at 8:30 am BST while US reading will be released at 2:45 pm BST. In both cases, slightly weaker readings are expected. DE30 has lost some ground last week and PMI releases may be a chance for a recovery.
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