The week of Oct. 26 to Oct. 31 features a rash of decisions by global central banks on how to handle monetary policy in a low-inflation, low-oil price environment. The Federal Reserve isn’t expected to raise interest rates this week when the Fed Open Market Committee meets, particularly in the wake of decisions by the European Central Bank (ECB) and the People’s Bank of China (PBOC) to loosen monetary policy.
Monday, Oct. 26
Markets will continue to react to Friday’s decision by the PBOC to slash its primary interest rate 0.25%. The cut represented the sixth time since November 2014 that the central bank has lowered rates. The EUR/USD will also be in focus when Germany releases its monthly Ifo Business Climate Index. Consensus expectations for the European Bloc’s largest economy call for an index rating of 107.8, slight decline from the previous month. Meanwhile, U.S. home sales will offer an update on the housing market for the month of September. Finally, trade reports out of New Zealand will likely affect the NZD/USD, as the nation is expected to have run a trade deficit in the wake of slowing growth and demand in China.
Tuesday, Oct. 27
The Fed Open Market Committee kicks off its seventh meeting of 2015, and traders are trying to gain better insight into the prospective timing of when the Federal Reserve might raise interest rates from record lows for the first time in roughly seven years. Meanwhile, across the Atlantic Ocean, the GBP/USD will be in focus when National Statistics reports third-quarter GDP for Great Britain. Consensus forecasts call for the report to match the Q2 figure of 2.4%. Finally, the U.S. will release a wealth of data points that includes Consumer Confidence, the Case-Shiller Home Price Index, monthly durable goods orders for September, and the October Services PMI.
Wednesday, Oct. 28
All eyes around the globe will be on the Federal Reserve when it releases its press statement on its October monetary policy meeting. CME Group FedWatch puts the odds that the central bank will maintain current rates at 93.1%, setting the stage for the December meeting. Economists have suggested a rate hike in December, but the markets have priced in a hike for March 2016. Meanwhile, AUD/USD will be on the move when the Australian Bureau of Statistics announces third-quarter CPI, while the NZD/USD is likely to dip when the Reserve Bank of New Zealand announces its rate decision and issues a monetary policy statement. Traders and anticipate that the RBNZ will hold rates at 2.75%. Finally, late in the day, Japan will release its September industrial production figures, an indicator of demand in China.
Thursday, Oct. 29
On Thursday, keep an eye out for the third-quarter GDP report. Consensus expectations call for a decline from 3.9% in Q2 to 1.4% in Q3, with the downturn tied to trade concerns and falling construction spending. Given that the FOMC meeting concludes on Wednesday, the Fed likely won’t factor the quarterly report into its interest rate decision. That said, expect the Fed to weigh any decline when it meets in December to discuss monetary policy. Europe is in focus when Germany reports its unemployment figures of September, in addition to its CPI numbers. Japan will report a wealth of data late in the day that includes its unemployment and jobs numbers, national CPI, and updates on household spending.
Friday, Oct. 30
The markets wrap up a busy week of data, first down in New Zealand and Australia. Third-quarter PPI data in Australia will provide a proxy on spending and demand from its largest export market in China, while New Zealand offers an October update on Business Confidence. In Japan, the nation’s central bank will report its interest rate decision and hold a press conference on monetary policy decisions. Given the Fed’s reluctance to raise rates, a challenge has faced the Bank of Japan. Governor Haruhiko Kuroda is likely to announce plans to hike its bond-purchasing program in order to combat lackluster inflation levels.
Check back tomorrow for updates on the Federal Reserve and earnings reports from the top companies on the Dow and Nasdaq.