Trading Week Ahead

After a week of headlines dominated by conflict and US yields, the focus now turns to a barrage of data, including China's GDP, inflation and jobs numbers from the UK, and the ramp-up of third-quarter earnings season.

Top Events in Review

The start of the week was a bit choppy, with US bond traders away for a holiday and concerns that the escalation in the conflict over Gaza would lead to some contagion.

Markets quickly returned to the usual data-driven dynamics, with investors digesting a series of FOMC members suggesting they were not as partisan towards hiking. That was confirmed with the release of the FOMC minutes, with the assessment being that Fed Chair Jerome Powell was more hawkish in his post-rate decision comments, leading to a 90% expectation of a no rate hike at the next meeting now, up from 70% prior the release.

Pepsico's strong earnings report helped support risk appetite that grew throughout the week, also aided by rumours that China would increase deficit spending to spur the economy. US CPI came in hotter than expected, leading to worries that inflation might be more persistent than thought.

Across the Atlantic, various ECB policy decision board members expressed diverging views on where the terminal rate would be.

Biggest Market Movers

WTI jumped over 5% on Monday, following the start of the latest Israeli-Palestinian war, but faded the entirety of the gains by the end of the week, driven by API and EIA large stock builds.

Gold trended higher through the week on the market taking a more safe approach following Gaza tensions and from falling yields.

Nasdaq was the best index performer in taking advantage of the weakening dollar and falling yields.

Top Events in the Week Ahead

A relatively busy week is coming up as markets start to brace for the releases of GDP figures from major economies.

China GDP, And More, to Impact Sentiment

China is the first of the largest countries to report its growth figures for the third quarter, which is expected to see a relatively stable quarterly GDP change of 0.9% compared to 0.8% in the second quarter. But compared to the prior year, the Asian giant is expected to see only 4.6% growth, down from 6.3% prior and below the country's 5.0% target.

Other important Chinese data coming out include retail sales, which are expected to see a decline in growth, a further sign that the economy in China might not be strong enough to lead global growth. WTI could move past $87.15 on a positive print, heading to $90 next, with a dismal release potentially weakening the commodity towards the $80 a barrel. Moves will depend on where crude trades at, being influenced by several drivers.

Speaking of consumer demand faltering and a potential sign of slowing economic growth, the US will report its September retail sales figure, expected to come down to 0.3% from 0.6% prior. UK retail sales, meanwhile, are seen relatively steady at 0.3% compared to 0.4% growth in the previous month. A GBP/USD below $1.23 could see further drops towards $1.20, but moving past the barrier could open up 1.2444.

Inflation Figures Keep Rolling In

After the largest economies reported inflation figures last week, the focus turns to the smaller of the majors.

Canada is expected to see headline inflation continue to accelerate to 4.5% from 4.0% prior, with the core rate seen steady at 3.3%. Loonie has support at 1.3485 and resistance at 1.38.

The UK is forecast to continue improving, with headline inflation coming down to 6.5% from 6.7% prior and core falling to 5.9% from 6.2%, which would align with the BOE's outlook. Next support for Footsie can be seen at 7500, with resistance past 7760.

In its final reading, the Eurozone is expected to confirm its inflation rate at 4.3%. EUR/USD could lose the 1.045 support unless bulls reclaim 1.064.

Finally, Japan's inflation rate is expected to come down to 3.1% from 3.2% prior, while the core rate is seen at 2.9% compared to 3.1%. This comes a day after Japan is expected to report its trade deficit narrowed slightly. USD/JPY above 150 could advance to 152, whereas support is settled at 147.50.

Jobs Numbers on the Docket

The UK is expected to see its claimant count rate grow to 22.0K from 0.9K, but the unemployment rate to stay steady at 4.3%. Average earnings are seen slowing but well above inflation at 7.5% compared to 8.5% prior.

China's unemployment rate is expected to remain steady at 5.2%, as is Australia's unemployment rate at 3.7%. Aussie could head towards 0.62 once bears clear 0.63.

Other Events and Earnings

Monday will see the publication of China's PBOC 1-year MLF. Tuesday has RBA minutes. Wednesday includes US building permits and housing starts. On Thursday, China publishes its housing price index. New Zealand credit card spending is expected on Friday.

Earning season ramps up this week, with reports coming thick and fast from the likes of Charles Schwab, Johnson & Johnson, Lockheed Martin, Tesla, Procter & Gamble, ASML, Taiwan Semi, Philip Morris and American Express.