Forecasting the upcoming week: US Presidential Elections overshadows Fed’s decision

This past week, the US Dollar consolidated at around familiar levels, though it is set to snap four consecutive weeks of gains ahead of a busy schedule. The financial markets narrative has been the same during the last six to seven weeks, with investors eyeing US Presidential elections. Efforts of US President Joe Biden to reach a ceasefire in the Middle East failed, keeping geopolitical tensions high. Meanwhile, the odds of a scenario of the Federal Reserve’s achieving a soft landing increased.

The US Dollar Index (DXY) consolidated and was set to post minimal losses, though it clung to the 104.00 figure for the second consecutive week, and it failed to clear a resistance trendline at around 104.50. The US Presidential Elections kick in on November 4, but the initial results could be published on November 5. That same day, the schedule would be packed with the release of the S&P Global Composite PMIs, which would be overshadowed by the ISM Services PMI. The Federal Reserve’s monetary policy decision begins on November 6, though it will end the next day, followed by the usual press conference by Fed Chair Jerome Powell. Initial Jobless Claims would be released on November 7, before the Federal Open Market Committee (FOMC) decision, followed by the Consumer Sentiment poll revealed by the University of Michigan on November 8.

EUR/USD consolidated during the week and is set to end the week 0.30% up. However, a close below 1.0850 would keep bears hopeful of pushing the shared currency lower amid the risks of a ‘hawkish’ pushback by Fed Chair Jerome Powell. Several HCOB Flash PMIs in Germany, France, and across the whole Eurozone’s bloc on November 4 would give cues of the economic growth. The EU’s Investor Confidence will be revealed on the same day, followed by the Eurogroup meeting on November 5. HCOB Services PMIs for the bloc and EU countries will be announced on November 6, along with prices paid by producers in the euro area. November 7 will witness the release of Retail Sales, followed by the EU summit.

In the UK, the GBP/USD extended its weekly losing streak to five, sponsored by Autumn’s budget presented by Chancellor Rachel Reeves. The Pound Sterling was punished by the markets and is set to end the week closer to 1.2900 than 1.3000. The budget aimed to stimulate the economy could spark a jump in inflation at a time when the Bank of England’s battle elevated prices. The docket would be scarce, led by the BoE’s monetary policy decision on November 7, followed by Governor Andrew Bailey’s speech.

USD/JPY remained subdued, capped at around 151.70/153.90 after Bank of Japan’s (BoJ) Governor Kazuo Ueda and the board kept rates unchanged at 0.25%. Next week’s schedule will be light, with the release of BoJ’s meeting minutes on November 5 and the November 6 report of Labor Cash Earnings.

On the AUD/USD front, the pair snapped two days of gains, losing over 0.40% daily and 0.70% weekly. Next week, the calendar begins with the release of October inflation figures on November 3, followed by the Reserve Bank of Australia's monetary policy decision on November 4. The next day, November 5, AIG Industry Index is eyed, followed by the Trade Balance on November 6.

Anticipating Economic Perspectives: Voices on the Horizon

• November 4: RBA Governor Michele Bullock press conference and ECB’s Elderson.
• November 5: ECB’s President Lagarde and member Isabel Schnabel.
• November 6: ECB’s Lagarde, De Guindos, and Joachim Nagel would cross the wires.
• November 7: Post monetary policy decision press conferences by BoE’s Bailey and Fed Chair Powell. ECB’s Lane and Elderson.
• November 8: Would cross the wires, ECB’s Cipollone, BoE’s Pill and Fed’s Bowman.

Central Banks: Upcoming Meetings to Shape Monetary Policies

• The RBA policy decision on November 5.
• The National Bank of Poland, the Riksbank, and the Norges Bank decisions on November 6.
• The BoE and the Federal Reserve would unveil its rates decision by November 7