Trading Week Ahead

Last week's key events show the US GDP surprising to the upside and the ECB keeping rates unchanged as expected, though keeping the door open a sliver to more hikes. In the week ahead, markets will focus on interest rate decisions from the Fed and BOE, while final PMIs and the all-important NFP will be coming out.

Top Events in Review

Markets got a surprise from the big data event last week after US GDP came in at 4.9% compared to the 4.5% expected, the fastest growth rate since 2021. Washington cheered the news as a sign that the US has avoided a recession, but Wall Street was more cautious as several of the stocks driving gains provided disappointing results around the same time. 

In other US data, the GDP Advance Price Index was above expectations, but the quarterly Core PCE was slightly below expectations, leaving the Fed with mixed data as it went into the pre-rate decision blackout period. 

Preliminary PMIs in Europe kept the Euro under pressure, reviving concerns that the recession in Germany could spread. As was widely anticipated, the ECB did not change its policy, with President Christine Lagarde shooting down whether rate cuts had been discussed and refusing to say that peak rates had been reached. 

The BOC also kept rates unchanged, saying that further hikes were possible if they were needed. 

In geopolitics, Israel continued to delay the long-expected ground invasion of Gaza but disclosed that some units had made an incursion in what analysts deemed a "recognisance in force" action. 

The US House finally elected a Speaker, Representative Mike Jonson from Louisiana. 

Biggest Market Movers

• Nasdaq lost over 2% as tensions in the Middle East brew, and investors fret about growing US debt. Tech giants were seen reporting mixed-to-disappointing earrings or guiding poorly.
• Oil fell at the start of the week, with WTI going below the $85/bbl level as supply concerns eased.
• EURJPY experienced significant volatility in the middle of the week after the yen weakened above the psychologically important 160 handle to record a fresh '08 high, but there was no sign of intervention from Japanese authorities.

Top Events in the Week Ahead

Markets will be a little discombobulated next week as Europe ends daylight savings time a week before the US does, and there are a series of holidays that leave banks and governments closed while the markets remain open. While that's happening, some major events, including the FOMC and BOE rate decisions, are on tap. 

Central Banks on the Docket

The Fed is broadly expected to keep rates unchanged at this meeting but with a keen focus on the statement and post-rate decision presser to see if there is any indication for a potential rate hike in the December meeting. S&P 500 has expected round support at 4k, whereas resistance resides at 4300.

The BOE is also expected to keep rates steady despite increased pressure from inflation numbers that beat estimates. But the focus could be on forward inflation pressure as the economy slows and last year's energy price hike rolls off. 7300 is short-term support above 7260 in FTSE, while resistance can be seen at 7480.

The BOJ will also meet, with analysts unanimously expecting no policy change despite the recent currency fluctuations. USDJPY remains near 152, with support at 148.70 suggesting yet another fakeout.

NFP and PMIs on Tap

The next major event for the week will likely be the NFP from the US, coming out on Friday. But the data being published so soon after the latest FOMC meeting could keep the market reaction muted. Job creation is expected to fall back to the more "normal" figure of 190K, compared to the large surprise of 336K reported last time. The unemployment rate is also seen staying steady at 3.8%. After failing to recapture 1.07, 1.0475 returns in focus in EURUSD.

Global final PMIs will also be on the radar as investors fret Europe is headed into a recession, and China's slowdown could deepen. China's Caixin manufacturing PMI is expected to remain marginally in expansion along with the official NBS number. AUDUSD could move from the latter, breaking either the top at 0.64 or the bottom at 0.6270.

Other Events and Earnings

Monday sees German inflation figures. For Tuesday, Eurozone inflation figures are on tap. Wednesday has  US JOLTs and ISM Manufacturing PMI. On Thursday, the Australian trade balance is released. And Canadian employment figures are published on Friday. 

The earnings season is expected to peak throughout the week, with major names reporting, including HSBC, McDonald's, Pfizer, AMD, Qualcomm, Mondelez, Apple, Shell and Berkshire Hathaway.