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Weekly Outlook | Inflation Trends, Rate Decisions, and Currency Movements
Updated Updated Tue, 2024 October 22 02:05
Last week, Canada’s CPI declined 0.4% in September, which caused the Canadian Dollra to lose momentum against other currencies. New Zealand’s CPI rose 0.6%, following a 0.4% increase in June, which helped the Kiwi to gear up some steam. The UK’s annual inflation rate fell to 1.7% in September, down from 2.2%, surpassing the forecast of 1.9%. However, it seems that the general weakness in the Dollar might resurface, which in the end helped the Pound. The ECB cut key interest rates by 25 bps in October, continuing its easing cycle. The EUR had lost some steam in the hours afterwards but ended the week on a slightly positive outlook. Finally, the biggest winners can be seen with Gold prices surging to USD 2,715 per ounce and Silver trading close to the USD 34.00 zone.
Crude oil prices hit two-week lows at USD 69.36, driven by weak demand from China and speculation of a cease-fire in Gaza after Hamas leader Sinwar’s death.
Important events this week:
Canada Interest Rate : At 15:45 CET On Wednesday, October 23, 2024, the Bank of Canada is set to announce its interest rate, projected at 3.75%. This follows a 25bps cut in September 2024, bringing the key rate to 4.25%, marking the third consecutive 25bps reduction after maintaining a terminal rate of 5% for 10 months during the hiking cycle. USDCAD is poised for a potential upside breakout of the downtrend line at 1.3837 on the 4-hour chart.
If the breakout holds, the exchange rate could rise to 1.3950. Conversely, if the breakout fails, a decline to 1.3745 is likely.
Euro Area Manufacturing PMI : On Thursday, October 24, 2024, at 09:30 CET, the Eurozone Manufacturing PMI is expected to be announced at 40.7 The September 2024 PMI was revised slightly lower at 40.3 from a preliminary 42.4, down from 42.1 in the previous two months. A potential uptrend rejection is observed in the EURUSD daily chart at 1.0812.
If this rejection holds, the exchange rate could rise to 1.1010; however, if it fails, a decline to 1.0671 is likely.
United States Manufacturing PMI : On Thursday October 24, 2024, at 15:45 CET, the S&P Global US Manufacturing PMI is forecasted at 47.5. The September 2024 PMI was revised to 47.3 from a preliminary 47.0, marking the lowest level since June 2023. A potential downside breakout of the uptrend line is identified in the USDJPY 1-hour chart at 149.51.
If this breakout holds, the exchange rate could drop to 147.15; conversely, if it fails, a rise to 150.31 is likely. Furthermore, the market is trading just below the 50- moving average and hence might offer some more downside potential.
