The Week Ahead: 24th - 28th October 2022

The Week Ahead: 24th – 28th October 2022

Overview of the Week Ahead

Prime Minister Liz Truss is on her way out, just as markets wanted. But the huge economic and fiscal headwinds ahead spell further pain for the pound regardless of who wins the contest to become the UK’s next leader.

Investors distracted by the political circus engulfing the nation may start turning back to the economy’s woeful outlook: inflation at a 40-year high, soaring interest rates, depressed consumer sentiment, and a potential return to austerity.

Throw this week’s premiership race and the dollar’s strength into the mix too, and that implies that the sterling’s bounce from an all-time low last month is on borrowed time. And while the bond market meltdown has also subsided, there are plenty of challenges there too. Even with Truss’ sweeping unfunded tax cuts now scrapped, net issuance of gilts for the next fiscal year remains vast and borrowing costs are sky-high.

Whoever prevails in this week’s Conservative Party leadership contest will need to focus on damage control rather than chasing meaningful economic growth.

The U.S. is to release third-quarter GDP figures which are expected to show a return to growth after the technical recession in the first half of the year. The European Central Bank is widely expected to deliver another jumbo rate hike of 75 basis points on Thursday as inflation in the Eurozone approaches 10%. Political events in the U.K. will remain in the spotlight as the Conservative Party selects a new prime minister. Meanwhile, investors will be watching out for delayed economic data from China after President Xi Jinping consolidated power for a historic third term on Sunday.

This Week’s High-Impact Events

The times below are GMT +3.

Monday 24^th October

From 10.15 onwards – Europe – Flash Services & Flash Manufacturing PMI

Potential instruments to Trade: EUR Crosses.

11.30 – UK – Flash Services & Flash Manufacturing PMI

Potential instruments to Trade: GBP Crosses.

16.45 – US – Flash Services & Flash Manufacturing PMI

Potential instruments to Trade: USD Crosses.

18.00 – US– Treasury Sec Yellen Speaks

Potential instruments to Trade: USD Crosses.

Tuesday 25^th October

Tentative – Australia – Annual Budget Release

Potential instruments to Trade: AUD Crosses.

11.00 – Europe – German ifo Business Climate

Potential instruments to Trade: EUR Crosses.

17.00 – US – CB Consumer Sentiment & Richmond Manufacturing Index

Potential instruments to Trade: USD Crosses.

20.55 – US – FOMC Member Waller Speaks

Potential instruments to Trade: USD Crosses.

Wednesday 26^th October

03.30 – Australia – CPI q/q & Trimmed Mean CPI q/q

Potential instruments to Trade: AUD Crosses.

17.00 – Canada – BOC Monetary Policy Report, BOC Rate Statement, Overnight Rate

Potential instruments to Trade: CAD Crosses.

17.00 – US – New Home Sales

Potential instruments to Trade: USD Crosses.

18.00 – Canada – BOC Press Conference

Potential instruments to Trade: CAD Crosses.

Thursday 27^th October

15.15 – Europe – Main Refinancing Rate & Monetary Policy Statement

Potential instruments to Trade: EUR Crosses.

15.30 – US – Advance GDP q/q, Advance GDP Price Index q/q, Core Durable Goods Orders m/m, Durable Goods Orders m/m, & Unemployment Claims

Potential instruments to Trade: USD Crosses.

15.45 – Europe – ECB Press Conference

Potential instruments to Trade: EUR Crosses.

Friday 28^th October

Tentative – Japan – BOJ Outlook report, Monetary Policy Statement, & BOJ Press Conference

Potential instruments to Trade: JPY Crosses.

15.30 – Canada – GDP m/m

Potential instruments to Trade: CAD Crosses.

15.30 – US – Core PCE Price Index m/m

Potential instruments to Trade: CAD Crosses.

17.00 – US – Pending Home Sales m/m, & Revised UoM Consumer Sentiment

Potential instruments to Trade: USD Crosses.

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