Today, a report on retail sales in September will be published. Despite the fact that a month ago the report was rather weak, there is no reason to wait for a failure in sales, since private consumption in the US remains high.
Also on Monday, the Treasury will publish a September report on the state of the budget, and surprises are possible here. All attempts by the Trump administration to maintain budget revenues do not yet lead to a visible result, on the contrary, the trade deficit with China continues to grow. The consumers are in a hurry to buy themselves in anticipation of the Christmas holidays, because they expect prices to rise due to tariff restrictions.
On Tuesday, attention will be directed to the report on industrial production in September, which can in no way reach a sustainable growth path, despite the tax reform and capital repatriation measures.
The greatest interest is the publication on Wednesday of the minutes of the FOMC meeting of September 26. After a deep correction in the markets that occurred in recent days, an overly optimistic tone of the protocols could be a disservice to the dollar, as it will increase the likelihood of a deterioration in the forecast for the rate at the December meeting.
Eurozone
Until Wednesday, the situation in the euro area will largely depend on political factors. On Monday, the first data will appear on the elections held in Bavaria on October 14, at which the Merkel CDU party may lose its sole right to form a cabinet of ministers due to the rapid growth of Euro-skeptics, the Alternative for Germany party. A low electoral result for the CDU will put pressure on the euro in the short term.
The second factor is the refusal of Italy to make changes to the budget, despite the fact that its planned deficit exceeds the permissible norms. The European Commission explicitly warned the Italian authorities that the budget would be rejected, and the likelihood of the ECB's interventions in the Italian debt market would be reduced to zero in the event of insubordination. The draft budget will be presented today, and in response to the euro may also decline.
On Tuesday, ZEW will present business sentiment indices in Germany and the eurozone as a whole, with negative forecasts. On a set of indicators for the euro on Monday morning, the negative outweighs in many ways, which makes the euro's chances of growth weak.
The currency pair EUR / USD will trade in the sideways, the probability of growth above the resistance of 1.1610 is low, and the support level of 1.1533.
Great Britain
On Thursday, the EU-UK summit will open, at which an agreement on Brexit is expected to be signed. Perhaps the announcement of the agreement reached will be commented on a day earlier, since, on Wednesday, the EU leaders will hold a working lunch in Brussels. Reaching an agreement is a positive factor for the pound, but since the agreement reached a leak on Friday, Monday is unlikely to show an increase in the pound, since concluding a political agreement is only the first stage, there is still no clarity on the trade agreement.
Two documents are being prepared for signing at the summit, the first of them regulate the procedure for financing European projects by Britain, under which its signature appeared earlier, and also fixes the absence of the border between Ireland and Northern Ireland, the second will outline the principles of the future agreement.
On Tuesday, a report on employment will be published, the dynamics of average wages are of most interest. Negative forecasts, it is expected that wage growth, including bonuses, will slow down from 2.6% to 2.4%, which will put pressure on both inflation expectations and the GBP / USD rate.
Today, the pound will trade sideways, with a downward trend. The supported range of 1.3060 / 71 and further 1.3019, resistance 1.3166.
The material has been provided by InstaForex Company - www.instaforex.com