Main events of the upcoming week
The focus of the market attention is still the news from the United States. Investors have reacted positively to Donald Trump's quick recovery, but bitter political struggles in the US are severely limiting investor risk appetite.
The White House and Democrats cannot agree on a new package of measures to support the economy, while the Fed is urging Congress to increase fiscal stimulus to avoid negative consequences in the economy. It is obvious that as the presidential elections, which are to be held on November 3, approach, the degree of political confrontation in the United States will only increase. Most experts predict a victory for Biden, but in the remaining weeks the balance of power in the election race may still change significantly.
Most likely, next week, the main attention of investors will continue to be focused on domestic political news from the United States. Moreover, in the economic calendar in the next 5 days, a deficit of important statistical reports is expected, which can significantly affect trading.
Germany - ZEW institute indexes
German economy has shown a strong recovery in the past few months, but the latest data show a sharp rise in the number of people infected with COVID-19. This could lead to tougher quarantine measures and a slowdown in activity in the leading EU economy. Experts predict a decline in the main indexes calculated by the ZEW Institute. If analysts' expectations are confirmed, the European currency may come under pressure, since the German economy is the locomotive for the recovery of the entire EU economy.
USA - consumer price index
In recent months, data on the consumer price index have had a rather restrained effect on trading. The Federal Reserve has softened its approach to inflation targeting, allowing for a short-term moderate rise in the CPI above its target of 2%. The actual value of the indicator remains below the target level.
In the near future, inflationary pressures are likely to remain moderate. A slight deviation of the consumer price index in one direction or the other will not change the expectations of investors regarding the further policy of the Fed. Therefore, the publication of the inflation report is likely to have a weak and short-term impact on trading.
Only significant deviations of the actual indicators from the forecast values can cause a strong market reaction.
USA - Retail Sales Report
The retail sales report is a key event on the economic calendar for the upcoming trading week. It is an important indicator of consumer spending and one of the most important indicators of the pace of development of the American economy. Therefore, the impact of this report on the US dollar can be very strong.
In September, analysts forecast retail sales to grow 0.5%.