It is very likely that the difference between success and failure in Forex/CFD trading depends primarily on which assets you choose to trade each week and in which direction, and not on the exact methods you might use to determine trade entries and exits.
Therefore, at the beginning of the week, it is a good idea to look at the big picture of what is developing in the market as a whole and how such developments are influenced by macro fundamentals, technical factors and market sentiment.
Fundamental analysis and market sentiment
Overall, last week saw a continued rally in risk aversion, driven in part by slightly higher-than-expected US inflation (the US consumer price index stood at 3.7% compared to 3, 6% expected), partly from FOMC statements suggesting there will be another rate hike in 2023. , and partly from the ongoing war in the Middle East between Israel and Gaza, which could widen dramatically at any time. The Swiss franc and gold were the biggest safe-haven gainers, but other risk-averse assets such as the U.S. dollar and Japanese yen also gained.
Last week was quite weak in terms of major data releases, with the main events being US CPI and PPI data which showed that inflationary pressure in the US economy is stronger than previously thought . The most recent US FOMC minutes were also released, suggesting that the Fed remains strong in support of a further rate hike in 2023.
The New Zealand general election resulted in a change of government, with the Conservatives gaining a majority and ousting the Liberal government that had governed for the past 6 years.
Other key data released last week were:
- UK GDP: Turned out as expected.
- Preliminary UoM consumer sentiment in US – worse than expected.
- US Unemployment Claims – as expected.
- China CPI (inflation): lower than expected.
The week ahead: October 16 – 20
Next week in the markets will likely see a lower level of volatility than last week, as there will be fewer releases of very important economic data. The key data released this week are, in order of importance:
- US retail sales
- UK CPI (inflation)
- Canadian CPI (inflation)
- New Zealand CPI (inflation)
- Australian RBA Monetary Policy Meeting Minutes
- Unemployment claims in the United States
- US Empire State Manufacturing Index
- UK retail sales
- Change to UK claimant count
- Australian unemployment rate
- Chinese industrial production
Credit by DailyForex.com
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