The Fed meeting as well as the US NFP report for October are already behind us but it does not mean that the next week will be in any way boring. Traders will be offered US CPI reading for October. On top of that, US midterms elections will take place on Tuesday. Be sure to watch US500, GOLD and GBPUSD next week!
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US midterms elections scheduled for November 8, 2022 are an important market event to watch in the days ahead. There are expectations that Democrats may lose control over the House. Historically, divided Congress has been rather positive for stock markets as it reduces risk of sweeping reforms. In any case, S&P 500 gained over the 12-month period following each midterms since 1942!
Inflation remains the main headache for the Fed and discourages it from slowing policy tightening. As such, CPI reading for October, scheduled for Thursday this week will be key to watch for USD and gold traders. A slowdown could weaken USD and therefore be beneficial for gold. Market expects headline and core inflation to tick lower but meeting these expectations may be not enough to change Fed's mind.
Bank of England painted a grim picture of the UK economy this week, saying it expects the UK recession to last 8 quarters and does not see GDP going back to pre-pandemic levels over its investment horizon. BoE even went on to say that the UK economy is already in recession. This thesis will be put to a test this Friday, when the UK GDP report for Q3 2022 is released at 7:00 am GMT. Market expects a 0.2% QoQ contraction but a drop deeper than that may provide more fuel for GBP sell-off.