Last week was a big one for the financial market in multiple fronts. In Europe, the European Union fumed about Italy’s budget proposal while the anticipated Brexit deal failed to yield any results. In the Middle East, Saudi Arabia continued to think about its response to the accusation about the killing of a journalist. In Canada, the country reported a slower than expected inflation rate and in the oil market, the inventories continued to increase. This week, traders may focus on a few things including:
On Friday, Saudi Arabia came up with an explanation about what happened on the journalist. The country announced that the journalist was killed in an investigation gone wrong. This explanation did not make sense because the country could not explain about what happened to his body. This led to calls for a tougher response from the United States. Leaders from both sides of the isle asked the White House to respond firmly.
Donald Trump has called the death an important issue but has warned that his administration will prioritize American jobs and Saudi relations over tough measures. This means that traders may continue to focus on the murder with the goal of preventing further escalation. If the US enters into a conflict with Saudi, it may lead to higher price of the crude oil. This week, traders will also watch out for data from EIA to see the growth in inventories.
Bank of Canada
On Friday, Canada announced inflation numbers for the month of September. The numbers came short of what investors had anticipated leading the Canadian dollar to decline sharply against the USD. This lowered the expectations of a rate hike when the BOC meets this week. Before the data, investors had already baked-in a rate hike from the bank. While the numbers did disappoint, there is a high likelihood that the BOC may hike rates in the upcoming meeting. They also point towards two more hikes in 2019.
The ECB will hold its monetary policy meeting this week. Traders expect the ECB to leave interest rates unchanged. They have already indicated that the next rate hike will possibly come late 2019. Traders may however pay close attention to the language from ECB’s statement. Most importantly, they will want to get its forecast for 2019 and the crisis in Italy.
Last week was an important one for earnings. Closely-watched companies like Blackrock, Goldman Sachs, and Morgan Stanley released their earnings. This week, it will mostly be about technology companies. In recent weeks, the Nasdaq has seen increased volatility as investors worry about the growth of the technology sector. Some of the most important companies that will release earnings this week are: Microsoft, Intel, AMD, Amazon, Caterpillar, Boeing, and Twitter. This list is summarized below.
US Q3 GDP
Traders will pay close attention to the third quarter GDP numbers from the USA. The second quarter expanded by 4.2%. Traders expect the numbers to show that the economy expanded by 3.3% in the third quarter. There is a likelihood that the GDP may surprise the market because of the recent upbeat statistics from the US.
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