The coming week will be very intense in terms of macroeconomic releases. Investors will receive data on the U.S. labor market and PCE inflation. Following this, the Bank of Japan (BoJ) will make a decision on interest rates. Additionally, quarterly results from some of the most important companies in the S&P 500 index will be released simultaneously. Therefore, it will be worth watching the US500 index, USD index (USDIDX), and the USD/JPY currency pair.
US500
The index is still near historic highs. Quarterly company results have been mixed so far. A few reports have surprised positively, while others have disappointed. In the upcoming week, companies such as Alphabet, Amazon, Apple, Microsoft, and Meta will release their results. Moreover, labor market data, the last in this series before the next Fed meeting, will be released. According to the Fed’s latest meeting narrative, the labor market is now key, so heightened volatility in equity markets, including the US500, is expected with the ADP report on Wednesday and NFP on Friday.
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The above events will also significantly impact the dollar, which has strengthened considerably in recent weeks. The dollar has gained over 4% since the beginning of October, marking the most dynamic strengthening since the start of the consolidation in 2021. The forex market will focus mainly on labor market releases, but Thursday's PCE report could also be of interest. Better-than-expected data indicating a strong labor market may strongly support demand and extend the dollar’s upward trend. Conversely, a weak report could lead to potentially faster Fed rate cuts and a decrease in the dollar’s value.
The yen could experience exceptional volatility this week, especially given its recent weakness. On Sunday we also learn the Japanese parliamentary elections results. Therefore, the attention will shift to the BoJ’s interest rate decision on Thursday. The BoJ's narrative and tone during the press conference will be particularly interesting in the new political environment. Nevertheless, the decision itself is almost certain, as the market fully expects rates to remain unchanged.
