Two key interest rate decisions headline the economic calendar { Nov 4 – 10 Weekly Analysis }

Central banks decide

During the upcoming trading week interest rate decisions from the Reserve Bank of Australia and the Bank of England headline the economic calendar. Both central banks are expected to keep interest rates on hold, although the RBA may signal a December rate cut after recent disappointing inflation numbers. The Bank of England will also be discussing the UK economy for the first time since Brexit was delayed until January 31st next year.

European Prime Ministers and Presidents meet for a key EU Summit later this week to discuss ways to solve the ongoing problems in the eurozone. The European economy also releases a raft of important economic data this week including Unemployment, Inflation, Retail Sales and Manufacturing data. The Canadian and New Zealand economies will also release important monthly jobs figures.

Monday 4th November, EU Manufacturing PMI

The EU Manufacturing Purchasing Managers Index is released by Markit Economics and measures the activity level of purchasing managers in the manufacturing sector. The manufacturing PMI is an important indicator of business conditions and the overall economic condition in the eurozone because the manufacturing sector represents nearly a quarter of total GDP. A reading above 50 indicates expansion in the sector and below 50 indicates contraction.

  • The EURUSD pair is only bearish while trading below the 1.1070 level, key support is found at the 1.1040 and 1.1020 levels.
  • If the EURUSD pair trades above the 1.1070 level, buyers will likely test towards the 1.1180 and 1.1210 resistance levels.

Tuesday 5th November, RBA Rate Decision

The Reserve Bank of Australia Rate Decision is the market interest rate on overnight funds, with the RBA standing as the central monetary authority for the Australian economy. The Reserve Bank of Australia is widely expected to keep interest rates on hold at this meeting, following recent rate cuts. RBA policymakers are also tipped to strike an overall dovish tone towards the economy and monetary policy.

  • The AUDUSD pair is bearish while trading below the 0.6850 level, key support is found at the 0.6800 and 0.6740 levels.
  • If the AUDUSD pair moves above the 0.6850 level, buyers may test towards the 0.6930 and 0.6960 levels.

A screenshot of a computer screen Description automatically generatedWednesday 6th November, EU Retail Sales

EU Retail Sales measures the sum of goods and services sold monthly at eurozone retail outlets. The report is also considered a measurement of consumption and consumer confidence. Consumer confidence and economic growth signal an increasing number of sales which would fuel the eurozone economy. The changes are widely followed as an indicator of consumer spending and the leading indicator of the health of the EU economy.

  • The USDCHF pair is only bullish while trading above the 0.9890 level, further gains towards 0.9950 and 0.9990 levels remain likely.
  • If the USDCHF pair trades below the 0.9890 level, sellers may test towards the 0.9810 and 0.9740 support levels.

Thursday 7th November, Bank of England Rate Decision

The Bank of England interest rate decision is announced by the Bank of England after close deliberation from the central bank’s monetary policy committee. If the Bank of England is hawkish about the inflationary outlook of the economy and raises the interest rates it is positive for the British pound. If the central bank has a dovish view on the UK economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative for the British pound.

  • The GBPUSD pair is only bearish while trading below the 1.2900 level, key support is found at the 1.2850 and 1.2710 levels.
  • If the GBPUSD pair holds above the 1.2900 level, buyers may test the 1.3000 and 1.3050 resistance levels.

Friday 8th November, Canadian Employment Change

The monthly Canadian Employment Change is released by Statistics Canada and measures the change in the number of people employed inside the Canadian economy. The indicator is closely followed by the Bank of Canada and market participants. A rise in employment, consumption, and expenditures may lead to increased inflationary pressures that encourage central banks to tighten monetary policy.

  • The USDCAD pair is bearish while trading below the 1.3100 level, key support is found at the 1.3050 and 1.2990 levels.
  • If the USDCAD pair moves above the 1.3100 level, buyers may test towards the 1.3200 and 1.3265 levels.

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