25/10/2021
Main market drivers of the week
October 27, 03:30 GMT+3 — Australian Consumer Price Index
On Wednesday, October 27, the Australian Consumer Price Index will be announced. Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate. The average price of various goods and services are sampled and then compared to the previous sampling. If the Consumer Price Index is greater than forecast, the AUD is likely to strengthen against other currencies. Last time the result was better than the expectations, but AUD/USD declined right after the release and showed extreme volatility after.
October 27, 17:00 GMT+3 — BOC Monetary Policy Report
On Wednesday, October 27, the Bank of Canada rate statement will be announced. It's the primary tool the BOC uses to communicate with investors about monetary policy. It contains the outcome of their decision on interest rates and commentary about the economic conditions that influenced their decision. Most importantly, it discusses the economic outlook and offers clues on the outcome of future decisions. If the report is more hawkish than forecast, the CAD is likely to strengthen against other currencies. Last time BOC decided to keep the key rate and monetary policy stimulus at the same level. As the result, CAD/JPY dropped by 1%.
October 28, 14:25 — ECB Monetary Policy Statement
On Thursday, October 28, the European Central Bank policy statement will be announced. It's the primary tool the ECB members use to communicate with investors about monetary policy. It provides valuable insight into the bank's view of economic conditions and inflation — the key factors that will shape the future of monetary policy and influence their interest rate decisions. If the statement is more hawkish than forecast, the EUR is likely to strengthen against other currencies. Last time the ECB announced that the monetary policy will not be changed and EUR/JPY dropped by 0.5%.
October 29, 15:30 GMT+3 — Canadian GDP
On Friday, October 29, the Canadian month-to-month GDP change will be announced. It's the broadest measure of economic activity and the primary gauge of the economy's health. It measures a change in the inflation-adjusted value of all goods and services produced by the economy. If the GDP m/m is greater than forecast, the CAD is likely to strengthen against other currencies. Last time the data was worse than expected, but CAD/JPY kept following its strong uptrend after the stimulus tapering in Canada.
