The week ahead comes at the aftermath of last week’s compromise reached in the US, which meant that the default of the US economy was averted at the last moment and the partial shutdown of the US government has ended, since a temporary budget has been passed by the Congress and Senate. With the dust settling down gradually markets are starting to return to some kind of normality, feeling more confident that the great dangers have passed. However, since the compromise solution that has been reached in the US is of a temporary nature, all should hold their horses, because there are no guarantees that the situation will not be repeated early next year.
On another front, in Germany the end of last week saw the announcement of an initial agreement between Merkel’s CDU and the Social Democrats (SPD) to form a new government through a Grand Coalition. Although this is welcome news because a new German government is a prerequisite for any kind of meaningful developments in the German economy, the Eurozone, the European economy and therefore the world economy, it appears that the negotiations will be protracted and a new German government will not be in place before December.
Developments on these two fronts as well as elsewhere in the world are expected to influence world markets, thus binary options traders are advised to follow the news and react to what is happening, adjusting their trading decisions accordingly.
We expect that the coming week will also be characterized by moments of volatility in the global markets, giving rise to various opportunities for binary options traders. Let us have a closer look at the events that will shape the trading week ahead. Please note are all times cited are GMT.
Monday’s highlight in terms of economic data being released comes at 14:00, in the form of the Existing Home Sales figures in the US for the month of September. This is important as it is a clear indication of consumer confidence and the overall health of the economy. The forecast for today is 5.31-5.32 M, anything under that is expected to negatively affect the USD, while anything over to favour its trading.
Other important economic data to be released today is the German Producer Price Index (PPI), which measures the change in the price of goods sold by manufacturers, at 06:00 and might affect the EUR, and the Wholesale Sales figures in Canada at 12:30, which, as a leading indicator of consumer spending, might influence the faring of the CAD.
Today’s much anticipated figures come in the form of a series of important announcements regarding the U.S. economy at 13:30. The most important of these announcements and the ones expected to cause the most market volatility and effect the USD the most, are expected to be the Nonfarm Payrolls, which in reality measures the change in the number of people employed during the previous month, excluding the farming industry. As job creation is the foremost indicator of consumer spending, this figure is tremendously important as is the Unemployment Rate for the U.S. which will also be announced at 13:30. We don’t expect a significant change in this figure from the previous month, but if there is a noticeable increase or decrease, then the USD will be affected accordingly.
Also at 13:30 today in Canada, watch out for the announcement of the Core Retail Sales figure, which measures the change in the total value of sales at the retail level in Canada, excluding automobiles. Obviously this data, will affect the CAD and its pairing with other currencies.
The two buzz words for today are CPI and Canada. Let us see why: the Consumer Price Index, which measures changes in purchasing trends and inflation will be announce in Australia at 01:30 and might have a bearish or bullish effect for the AUD. At 09:00 Consumer Price Index data will be announced for South Africa as well and the results are expected to influence the ZAR. Also bear in mind today that at 09:30 the Monetary Policy Meeting Minutes, which are a detailed record of the Bank of England’s policy setting meeting will be released and this might mean market volatility for the GBP.
However, the most significant developments for Wednesday come from Canada since at 15:00 the Bank of Canada (BOC) governing council members will announce their decision on where to set the interest rate, while at 15:30 they will publicize their Monetary Policy Report, which will give investors a detailed insight into the economic conditions that influenced the decision on where to set interest rates. This will be followed by a speech from Bank of Canada Governor Stephen Poloz, whose remarks might lead to a short term positive or negative trend for the CAD.
High market volatility is expected today as Thursday is super busy in terms of announcements of key economic indicators. At 02:45 the Chinese HSBC Manufacturing PMI will be released, followed by the French Manufacturing PMI at 08:00 and the German Manufacturing PMI at 08:30, with the Manufacturing Purchasing Managers’ Index (PMI), measuring the activity level of purchasing managers in the manufacturing sector in Europe, being announced at 09:00.
Over at the U.S. there will be a series of economic indicators being announced during the early afternoon hours, the most prominent being the Initial Jobless Claims number at 13:30 and the New Home Sales figure, which measures the annualized number of new single-family homes that were sold during the previous month in the U.S. at 15:00, all of which will affect the USD.
The week culminates with a truly busy Friday across the board with developments that might lead to high market volatility, and which sets off at 00:30 in Japan with the announcement of the Tokyo Core Consumer Price Index (CPI).
At 09:00 a series of data concerning the German economy will be released, the most important being the German Ifo Business Climate Index, which rates the current German business climate and measures expectations for the next six months.
In the UK at 09:30 all important GDP data will be released and this is expected to affect the GBP, as GDP is the broadest measure of economic activity in any economy.
A series of announcements of economic indicators will take place today in the US as well, from which we feel that traders should watch more closely the Core Durable Goods Orders, which measures the change in the total value of new orders for long lasting manufactured goods, excluding transportation items. This will be at 13:30 and a higher than expected reading which will indicate increased manufacturing activity will impact the USD.