Weekly Outlook: October 22 - 26

Release Time:2018-10-22 02:32

This week investors will be looking ahead to Friday’s data on U.S. third quarter growth, while monetary policy decisions from the European Central Bank and Bank of Canada will also be in focus. The GDP data is expected to show that U.S. economic growth slowed in the third quarter from the second, when the economy grew at its fastest pace in four years. Investors will also be getting an update on the health of the U.S. housing market, which has been hit by rising borrowing costs as a result of Fed rate hikes, with the release of figures on new and pending home sales. Data on Friday showed that sales of existing homes fell for a sixth straight month in September, in what was the largest decline in more than two years. The BoC is widely expected to raise rates by a quarter point at its meeting on Wednesday and release updated economic forecasts. The ECB is expected to keep interest rates on hold at its meeting on Thursday, ahead of the expected end of its monetary stimulus program in December. The U.S. dollar slid against a currency basket on Friday, but stayed within sight of recent seven week highs, with the U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, down 0.36% to 95.38 in late trade. The euro gained ground, with EUR/USD rising 0.52% to 1.1513, rebounding from an earlier one-and-a-half week low of 1.1433. Sterling was also higher against the greenback, with GBP/USD changing hands at 1.3080 in late trade, up 0.48%. The euro and the pound were boosted after Bloomberg reported that British Prime Minister Theresa May is prepared to drop a key demand on the Irish border, which has hindered the European Union and the UK from reaching an agreement on Brexit. The dollar was higher against the yen, with USD/JPY up 0.31% to 112.54. Meanwhile, the Canadian dollar fell to its lowest level in five weeks on Friday, with USD/CAD hitting 1.3133 before pulling back to 1.3104 after data showing that Canadian retail sales and inflation were weaker than expected last month. The disappointing data was seen as unlikely to sway the BoC from raising rates this week, but it may take a less hawkish view of the economy.