Week of October 31

After a week where Meta (Facebook) stock collapsed but stocks ended higher, attention will shift back to the Fed as it's expected to keep hiking ahead of a crucial NFP.

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The week in review

• Apart from the Nasdaq, which fell more than 5% from its weekly peak, U.S. stocks had a generally positive week amid growing expectations of a dovish pivot from central banks. 
  
  
• Generally, better-than-anticipated earnings helped support optimism, with DJIA at an early-Sept high and 2.80% higher.
  
  
• The ECB raised rates as expected a couple of days after the BOC didn't hike as much as anticipated. EUR/USD reversed just shy of 1.10 towards 0.99 after losing more than 1.20% post-ECB, erasing most of its weekly gains into the weekend.
  
  
• U.K.'s Tory leadership contest ended in a default victory for ex-Chancellor Sunak after rivals pulled out ahead of the vote. The new PM delayed the release of an expected update on the budget until mid-November as an Autumn Budget. GBP/USD hit a 7-week high and recorded a positive week, 1.90% higher.
  
  
• Chinese markets were under pressure following the fallout from the CCP meeting and Xi consolidating power. The Hang Seng index fell nearly 7%.
  
  
• In geopolitics, the start of the week saw renewed concerns as Russia insisted that Ukraine intended to use a "dirty" nuclear bomb, which western leaders widely dismissed.

TOP EVENTS IN The week ahead

U.S. back into the spotlight

The U.S. is likely to be the primary market news source for the first week of November. European markets will be open on the first two days of the week, but with muted participation due to holidays. 

The key points are the Fed's meeting on Wednesday, expected to raise rates by another 75bps, focusing on guidance for how much to expect in December. 

On Friday, NFP are expected to drop to 200K jobs added, with the unemployment rate ticking up to 3.5%. 

USD/JPY printed an indecision bar with around 147.50 being a pivot, but it's likely to change due to the major calendar events. 152.00 is top and 145.00 bottom, with anything in-between adding to short-term bias.

PMIs in focus

China is expected to report October PMIs essentially unchanged and balancing between expansion and contraction. It comes after a month dominated by a week-long holiday and anticipation ahead of the CCP conference. U.S. manufacturing PMI is forecast to decline but still remain in expansion. European PMIs are expected on Wednesday and are forecast to fall further into contraction.

Eurozone stagflation, and BOE, RBA rates

Europe reports Preliminary Q3 GDP and Preliminary October inflation data simultaneously. The consensus is for economic growth to be flat quarterly, while inflation is expected to slow slightly but only be four decimals away from double digits. Germany's 30 index recorded its fourth consecutive week of gains after closing 2.10% higher.

The BOE is expected to raise rates by another 75bps on Thursday without the benefit of knowing what's in the budget. However, the BOE and Chancellor Hunt seem to have a much better rapport than the prior Chancellor. FTSE has been under and above the 7k handle, with BOE making a breakout possible.

The RBA meets but is expected to raise rates only 25bps after failing to deliver on market expectations last time, citing tighter liquidity conditions. Aussie reached 65c but quickly retreated to indecision levels around 64c. The low at 62c is major support outside the weekly range.

Other events and earnings

On Monday, Australia, Switzerland and Germany report retail sales. USD/CHF failed to get past parity last week and dropped to 0.9850 but managed to recover at 0.9950. Tuesday has New Zealand's quarterly employment data. Kiwi remains under pressure below 60c with immediate resistance at 0.59 if 0.58 finally caves. 0.57 is a short-term support. Wednesday sees German trade balance and unemployment. Swiss CPI is on the docket for Thursday, along with Eurozone unemployment and U.S. trade balance. Friday has Australia Retail sales and Canadian employment figures. Loonie appears mixed near 1.36, with breakout levels further out at 1.3770 and 1.35. Earnings season to peak next week, with reports from Rolls Royce, BT, Sainsbury's, Lufthansa, Eli Lilly, Qualcomm, CVS, Toyota, and Berkshire Hathaway scheduled.