New Zealand Official Cash Rate Decision: Expectations are set for a rate cut from 5.25% to 4.75%.
FOMC Meeting Minutes: Investors will closely scrutinize the Fed’s discussions for hints of further rate cuts in November or December.
US Inflation Data (CPI & PPI): Key figures that will provide critical insight into the Federal Reserve’s next monetary policy steps.
What Now?
The focus of this week centers on inflation and interest rate decisions. New Zealand’s anticipated rate cut will reflect concerns about its economic slowdown, which could push the NZD lower, especially if the cut meets or exceeds expectations. A surprise hold could provide temporary support for the currency.
In the US, the release of the FOMC Meeting Minutes will give us a glimpse into the Fed’s thinking ahead of the next policy decision. Key inflation data, particularly the CPI and PPI, will also be in the spotlight as markets gauge whether inflationary pressures are receding fast enough to justify further rate cuts. Lower-than-expected inflation could solidify expectations of rate cuts by December, weakening the USD. If inflation comes in above expectations, the Fed might be more cautious, delaying cuts and supporting the USD.
In Canada, the Unemployment Rate and Employment Change figures will provide insight into the health of the labor market. A higher unemployment rate or lower employment change could strengthen the case for dovish monetary policy, possibly weakening the CAD.
Market Events and Announcements
Times below are GMT +3.
Here are the key market events and announcements to watch for this week, based on the economic calendar:
Monday, October 7, 2024:
No high impact data releases
Tuesday, October 8, 2024:
3:30 AM – AUD – Monetary Policy Meeting Minutes: Minutes from the Reserve Bank of Australia’s last monetary policy meeting, providing insight into economic conditions and future policy changes.
Wednesday, October 9, 2024:
4:00 AM – NZD – Official Cash Rate: The Reserve Bank of New Zealand (RBNZ) is expected to cut the cash rate from 5.25% to 4.75%, driven by concerns over slowing growth.
4:00 AM – NZD – RBNZ Rate Statement: Details on the RBNZ’s monetary policy outlook and any potential forward guidance.
5:30 PM – USD – Crude Oil Inventories: Weekly data on US crude oil inventories, which could impact the energy sector and oil-related currencies.
9:00 PM – USD – FOMC Meeting Minutes: Details from the Federal Reserve’s September meeting, where traders will look for clues on the Fed’s future monetary policy stance.
Thursday, October 10, 2024:
10th-15th – CNY – New Loans: Measures the change in the total value of new loans issued to consumers and businesses in China. Provides insight into economic health.
3:30 PM – USD – Core CPI m/m: The US Core Consumer Price Index (CPI) excludes food and energy prices and is a key gauge of inflationary pressures. Expected at 0.3%.
3:30 PM – USD – CPI m/m: The headline US inflation figure, including all goods and services. Expected at 0.2%.
3:30 PM – USD – CPI y/y: The year-over-year inflation comparison. Expected at 2.5%.
3:30 PM – USD – Unemployment Claims: Weekly data on the number of people filing for unemployment benefits. Expected at 225K.
Tentative – GBP – Monetary Policy Report Hearings: Bank of England policymakers testify on inflation and economic outlook before Parliament.
Friday, October 11, 2024:
9:00 AM – GBP – GDP m/m: Measures the monthly change in the UK’s economic output. Expected at 0.0%.
3:30 PM – CAD – Employment Change: Measures the change in the number of employed people in Canada. Expected at 33.7K.
3:30 PM – CAD – Unemployment Rate: Expected to remain steady at 6.6%.
3:30 PM – USD – Core PPI m/m: Measures the change in the selling prices of goods and services. Excludes food and energy. Expected at 0.3%.
3:30 PM – USD – PPI m/m: Measures overall producer prices. Expected at 0.2%.
5:00 PM – USD Prelim UoM Consumer Sentiment: Preliminary data on consumer confidence in the US economy. Expected at 70.1.
5:00 PM – USD – Prelim UoM Inflation Expectations: Expected to be 2.7%, this data captures consumer expectations for inflation over the next 12 months.
Chart Insights: Key Charts to Watch
Chart 1: USD/JPY (Daily Chart)
Main Scenario:
The USD/JPY has formed a classic inverse head and shoulders pattern, a bullish reversal signal. The recent break above the key neckline resistance at 146.491 could signal further upside. However, it sees a significant resistance of Ichimoku cloud on its way. If the pair sustains its position above this level, the next targets to watch are 148.501 and 149.491, followed by a longer-term resistance at 153.355.
Impactful Events:
US inflation data and FOMC minutes are the primary drivers. A dovish tone from the Fed and lower inflation figures could halt the USD’s strength, limiting gains for USD/JPY. On the other hand, higher-than-expected inflation could support a stronger USD, pushing the pair towards the upside targets.
Alternative Scenario:
If the USD/JPY fails to hold above 146.491, a correction may be triggered. A break below 144.064 could shift momentum in favor of the bears, potentially driving the pair down towards 141.637, the base of the inverse head and shoulders.
Key Levels:
Resistance: 148.501, 149.491, 153.355
Support: 144.064, 141.637
Chart 2: NZD/USD (Daily Chart)
Main Scenario:
The NZD/USD has broken its upward trend and is currently testing support levels. The pair sits around 0.62518, which aligns with the 161.8% Fibonacci extension level from the previous upward swing. If the RBNZ cuts rates as expected, this could place further pressure on the NZD, pushing the pair towards the next support at 0.62175 and potentially down to 0.61739.
Impactful Events:
The RBNZ rate decision will be the most critical driver for this pair. A larger-than-expected cut could accelerate the NZD’s fall. Additionally, weaker US CPI and PPI figures might provide relief for the pair, temporarily stalling the downward trend.
Alternative Scenario:
Should the NZD/USD hold above the 0.62518 support and if the RBNZ decides against a rate cut, the pair could reverse upwards. The initial resistance is seen at 0.63148, followed by 0.63779.
Key Levels:
Resistance: 0.63148, 0.63779
Support: 0.62518, 0.62175, 0.61739
Errante’s Weekly Newsletter brings you critical market insights to keep you ahead in the financial world. Stay informed and make strategic decisions with Errante.
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