(MENAFN - DailyFX)
The dollar story may take a back seat this week as a light U.S. economic calendar will be overshadowed by earnings season and potentially market moving releases from other countries. The BoE minutes from their last meeting could determine the short-term direction for the Sterling. Meanwhile, a Bank of Canada rate decision and Canadian CPI will hold the key for “loonie” sentiment. However, the Chinese GDP report could have the greatest impact on the broader market, as the merging market economy has driven the global recovery.
- German Zew Survey (OCT) – Oct 19– 09:00 GMT
German Zew survey is forecasted to have improved to 63.5 from 59.9-the highest since November, 2007, as the outlook from investors brightens. Firm demand for exports continues to be a source of growth in the Euro-zone’s largest economy which has helped sustain the country’s recovery. A strengthening labor market is also adding to the improving domestic picture, as unemployment has fallen from 8.3% to 7.5%. German wage growth is a major concern for the ECB as they try to adhere to their price stability mandate. Forward looking investors improved sentiment is most likely based in expectations of continued domestic growth. Therefore, a surge in sentiment could put the ECB on alert and raise yield expectations - providing Euro support.
- Bank of Canada Rate Decision – Oct 19– 13:00 GMT
The Bank of Canada is expected to pause their tightening cycle as a stalling U.S. economy has policy makers cautious. Domestic growth remains strong on the back of emerging market demand for exports, but slowing growth from its main trading partner is increasing downside risks. Dovish comments following the release could weigh on the com-dollar as markets have priced in additional rate hikes over the medium term. Signs that central bank remains concerns over the path of inflation could fuel “loonie” support and have the pair back below parity. Join a DailyFX analyst for livecoverage of event.
- BoE Minutes – Oct 20 – 08:30 GMT
The MPC voted to keep their benchmark rate and asset purchase program on hold for another month but comments beforehand from Adam Posen will put the focus on the meetings minutes. The lone American on the committee stated that there was a “clear” case for adding to the central bank’s quantitative easing efforts. Markets will be watching to see if there was a split tally at the last vote with a new camp forming for additional measures. Andrew Sentance has been the one dissenter, as he continues to push for a rate hike, but calls for stimulus could sink the sterling. Conversely, more support for tightening could be supportive if there aren’t any offsetting votes. Joi
