The Fed’s minutes on Tuesday will be closely watched for hints about the interest rate path. Additionally, Eurozone business surveys will provide insight into recession risks, while Japanese inflation stats will be in focus as the yen attempts to recover. The US dollar will also be under scrutiny ahead of the FOMC minutes.
The US dollar has had a challenging month, with disappointing data releases and the Treasury’s decision to shift debt issuance leading to a decline in US bond yields and the dollar’s interest rate advantage. While the labor market shows signs of loosening, core inflation remains high, prompting speculation about the possibility of a rate cut in the future.
The upcoming FOMC meeting minutes are anticipated to provide clarity, with market pricing suggesting the tightening cycle is over and the next move will likely be a rate cut in the second quarter of 2024. Meanwhile, there are several data releases scheduled, and the question for FX traders is which central banks will cut rates first and the deepest.
In the Eurozone and the United Kingdom, PMI surveys will offer updates on the health of the economies. Any signs of moving closer to a recession could impact the euro and pound. Additionally, the minutes of the latest European Central Bank meeting and Germany’s Ifo survey will be closely watched.
In Japan, inflation stats for October will be released, with forecasts suggesting an acceleration in core inflation. This could potentially help the battered yen recover some ground. In Canada, inflation data will be released, followed by retail sales. The minutes of the latest RBA meeting are also due out in Australia.
