A preview of the news, earnings, and economic data to expect in the week ahead. This week includes the an OPEC meeting, the September non-farm payrolls report, rate decisions from the RBA and RBNZ, while markets continue to focus on rising bond yields.
What happened this week
5-day performance as of Friday October 1, 10am CET
Source: Finviz.com
The bounce after a 5% correction in the S&P 500 was faded and the major indices rolled over to their lowest levels since July, closing out their worst month since March 2020. The Swiss Market index didn’t fare any better, and is now down over 1000 points from its peak in August.
Gold was mixed, initially turning lower as the dollar rallied at the start of the week but when the dollar rally paused, gold jumped off 1720 to 1760 with a daily outside bar formation. Brent crude oil struck $80 per barrel for the first time in 3 years with all the energy commodities in high demand.
The prospect of Fed tapering remained front and centre, taking the dollar index to its highest in a year and EUR/USD and GBP/USD both tumbling to fresh 2021 lows. EUR/CHF never made it back above 1.10 with traders seeking out the Swiss franc as a haven.
Top 5 stories for the coming week:
The 5 events, news stories or market price action that could shape the week ahead:
1. OPEC+
It’s a poignant moment for the latest OPEC+ meeting with Brent crude oil reaching $80 per barrel. At previous meetings de facto leader Saudi Arabia has been the most cautious about the uncertain demand outlook and has battled with the likes of Russia and the UAE on raising output. The battle this time around will be about ‘how much’ to raise the quotas. There is already a plan in place for lifting production through the end of the year but the high oil price gives the cartel the option to raise output even more to meet the demand.
2. NFP
The last non-famr payrolls report (NFP) was a disaster so are we due a repeat or a comeback? Expectations are for 500,00 jobs created - that’s roughly in the middle of the 235k print and the lofty 700k expectations from August. But does this data even matter? Possibly not since the Fed looks like its on autopilot for a taper this year. We think a bad report could delay the taper from November to December, but the bar is high for delaying until next year. That probably means any dollar weakness after a miss would be short-lived and a strong report will extend the current USD gains.
3. RBA / RBNZ
The RBA will decide mid-week on whether to continue tapering despite the economy-killing lockdowns in Australia, which keep getting extended. At the September RBA meeting, the Aussie central bankers tapered from $5 billion to $4 billion bond purchases per week. A further taper to $3 billion seems priced in so keeping asset purchases unchanged could add to the softness in the Aussie dollar.
The Reserve Bank of New Zealand have done a 180-degree turn on previous guidance about a rate hike as soon as this week. The emphasis had been put on inflation and the out-of-control housing boom but the deputy governor recently said in a speech the central bank prefers a more cautious approach. The Kiwi dollar was already the biggest FX faller last week so appears to have priced in the dovish turn.
4. Debt Ceiling
The US government avoided a shutdown by passing last minute legislation on Thursday to keep the government running until December 3. BUT there is no resolution to the debt ceiling debate. Janet Yellen has named October 18th as the deadline before the US runs out of cash and risks a default on its debt payments. Read more in our blog: The US Debt Ceiling: Does it matter this time?
5. Q4 begins
September-November (i.e. the end of Q3 and the first two months of Q4) has historically been the most active time of the year for financial markets. With more signs of non-transitory inflation across the globe, China and Europe facing an energy crunch thanks to climate policy and supply chain bottlenecks and the Fed set to begin removing monetary stimulus, it’s all to play for.
Economic Calendar:
|
|
TIME (GMT) |
Country |
Event |
CONSENSUS |
PREVIOUS |
|
Mon 4 |
00:00 |
EUR |
Eurogroup Meeting |
|
|
|
|
08:00 |
USD |
OPEC Meeting |
|
|
|
|
14:00 |
USD |
Factory Orders (MoM)(Aug) |
0.50% |
0.40% |
|
Tues 5 |
23:30 |
JPY |
Tokyo Consumer Price Index (YoY)(Sep) |
- |
-0.40% |
|
|
03:30 |
AUD |
RBA Interest Rate Decision |
0.10% |
0.10% |
|
|
08:00 |
EUR |
Markit PMI Composite(Sep) |
- |
56.1 |
|
Wed 6 |
01:00 |
NZD |
RBNZ Interest Rate Decision |
0.25% |
0.25% |
|
|
12:15 |
USD |
ADP Employment Change(Sep) |
475K |
374K |
|
Fri 8 |
01:45 |
CNY |
Caixin Services PMI(Sep) |
- |
46.7 |
|
|
12:30 |
USD |
Nonfarm Payrolls(Sep) |
500K |
235K |
|
|
12:30 |
CAD |
Net Change in Employment(Sep) |
- |
90.2K |
Source: FXStreet.com
Corporate earnings:
|
TIME |
COMPANY |
EVENT |
|
10-Jul |
Tesla |
Annual General Meeting |
|
10-Jun |
Nike Inc. |
Annual General Meeting |
|
10-May |
PepsiCo Inc. |
Q3 2021 Earnings |
|
10-Aug |
Tata Consultancy Services Limited |
Q2 2022 Earnings |
|
10-Jun |
Constellation Brands Inc. (Class B) |
Q2 2022 Earnings |
|
10-Jul |
Seven & i Holdings Co. Ltd. |
Q2 2022 Earnings |
|
10-Jun |
Constellation Brands Inc (A) |
Q2 2022 Earnings |
|
10-Jun |
Tesco PLC Registered Shs |
Q2 2022 Earnings |
|
10-Jun |
Aeon Co. Ltd. |
Q2 2021 Earnings |
|
10-Jul |
ConAgra Foods Inc. |
Q1 2022 Earnings |
|
10-Apr |
Almarai Co Ltd Bearer Shs |
Q3 2021 Earnings |
|
10-Aug |
Yaskawa Electric Corp. |
Q2 2022 Earnings |
|
10-Jun |
Levi's |
Q3 2021 Earnings |
Source: markets.businessinsider.com/earnings-calendar
Thanks for reading and have a great week trading and investing!
-- FlowBank Research team --
