It's a new trading week and we bring you an overview of current economic events in the world that have influenced our trading decisions.
The beginning of the week was relatively quiet in terms of economic events. The first interesting figures were brought to us on Wednesday (20.10.2021), when we could watch the results of the Consumer Price Index (CPI) in the United Kingdom, the euro area and Canada.
On Wednesday morning, we could see that the latest figures released by the ONS (20 October 2021) showed a slight fall in UK annual inflation from 3.2% to 3.1%. Overall, however, it is still at elevated levels and is not expected to change the situation ahead of the November Bank of England (BOE) meeting.
Later came the CPI results from the euro area, which reinforced our view that there was no change from previous estimates and that the continued rise in annual inflation in the euro area was putting pressure on the European Central Bank (ECB).
At the end of the day, we got CPI results from Canada, which again brought stronger numbers and we remain in an uptrend here as well. These results are the last key input ahead of this week's Bank of Canada (BOC) meeting on Wednesday (27 October 2021).
In general, it can be argued that a higher than previous/expected CPI value has a positive impact on the currency - bullish.
The end of the week brought us some more interesting data from retail sales in the UK, which were slightly better than in September (previous -0.6%, current -0.2%). One thing to note is that the easing of restrictions hasn't exactly led to a major change in consumer behaviour and retail sales in stores are still subdued...
At the very end of the week, Fed Chairman Jerome Powell remarked that high inflation is likely to ease. But it will probably last until next year. As soon as he started talking, we could see the US dollar strengthening. Powell is going to run the attrition through Q1 and then call for a rate hike.
What's in store for the current trading week?
The beginning of this week can be almost calm. The change will occur midweek.
As I mentioned, we have a BOC meeting on Wednesday with a decision on interest rates. A day later, on Thursday, Japan will bring us important data on interest rate changes early in the morning.
This means that we expect significantly higher market volatility in the second half of the week.