Potential market moving events this week | …and what they might bring with them

This is the last week of the month. The main market moving events are in the United States, where the big expectation is that the Federal Reserve will announce the end of Quantitative Easing (QE). This has been responsible for softening the dollar so its end can be expected, all other things being equal, to tend to strengthen it. Because the end of QE has been well signalled, these effects will have been to a large extent priced in by now.

In the meantime the single most important counterpart currency to the US dollar, the Euro, is undergoing a process that approximates to QE, but only in fits and starts, due to the relatively more fragmented nature of the economies that go to make up the Euro zone and the tensions that arise, particularly in Germany, whenever inflation is mentioned (any kind of QE tends to cause inflation to rise).

Expectations

US durable goods orders have been oscillating recently, due to the way in which certain components, most notable aircraft sales, have been accounted for. On this occasion a rise of 0.5% is expected.

Consumer confidence has been on the up and up in the USA. So much so that it is expected on this occasion to reach a height that has not been seen for nearly seven years. Last week’s announcement of an easing in the conditions attached to mortgages can only increase this measure.

Wednesday sees the FOMC meeting at which it is expected that the end of QE will be announced. Interest rates will also be addressed, but no change is expected here. Of more importance will be the release of the FOMC meeting minutes, for which we must wait for about two weeks.

Gross Domestic Product, the measure of economic growth, is always eagerly awaited and this time will be no exception. The market will be looking for growth that is at or over 3%. Any clear deviation from that figure will cause movement in the currency.

Initial jobless claims will feed into the all-important Non-Farm payrolls report which will be released on the first Friday of November, while the Reuters / Michigan Consumer Sentiment index will complement the official consumer confidence release, which is approaching a seven year high, as already mentioned.