Economic Calendar – Top Things to Watch This Week
Q3 Earnings Season Kicks into High Gear
The week ahead marks the first big week of the third-quarter earnings season on Wall Street, with names like Goldman Sachs (NYSE:GS), Netflix (NASDAQ:NFLX) and IBM (NYSE:IBM) set to report.
Fed FOMC Meeting Minutes
The Federal Reserve will release minutes of its most recent policy meeting on Wednesday.
The U.S. central bank raised interest rates by a quarter point as was widely expected following its meeting on Sept. 26 – its third rate hike of the year – and took a slightly more hawkish tone by dropping the word “accommodative” to describe its monetary policy stance.
Federal Reserve Bank of San Francisco President Mary Daly speaks Tuesday, Fed Governor Lael Brainard speaks Wednesday, Fed Governor Randal Quarles speaks Thursday and Atlanta Fed boss Raphael Bostic speaks Friday.
The Fed foresees another rate hike in December, three more next year, and one increase in 2020, despite rising trade tension with China and mounting verbal pressure from the White House.
UK Inflation Figures
The UK Office for National Statistics will release data on consumer price inflation for September at on Wednesday.
Analysts expect annual CPI to inch down to 2.6%, a tad slower than the 2.7% increase seen in August, while core inflation is forecast to dip to 2.0% from 2.1%.
In addition to the inflation report, traders will focus on monthly employment and retail sales data, due on Tuesday and Thursday, respectively, for further hints on the health of the economy.
The British economy’s summer surge turned out to be stronger than expected as hot weather spurred consumer spending, although a weak August hinted at slower growth ahead of Brexit next year, official data last week showed.
Gold Price Outlook Finally Impacted by Safe Haven Demand
By Peter Hanks
Fundamental Forecast for Gold: Bearish
Although gold befitted from safe haven demand last week, it may be short lived. Friday saw a mixed trading day for US equities result in a green close. In Europe, equity losses were minimal. These developments suggest equities are regaining their feet and thus the drastic flight to safety will wane.
In the upcoming week, equities will be the key deciding factor for gold’s performance and they seem to be normalizing.
With that in mind, there were some other fundamentally bearish developments that flew under the radar this week. Overshadowed by plummeting equities, US CPI data was released and fell short of expectations. Although the miss is minor, it showcases lower than expected inflation. Lower inflation could weigh on gold’s use as an inflation hedge and thus act as a headwind for gold’s price.
With another drastic equity collapse unlikely, disappointing CPI figures, and bearish sentiment data, it would seem gold is due to retrace some of the gains it posted this week. For these reasons, the fundamental forecast for gold in the upcoming week is bearish.
Australian Dollar Held Up Last Week, May Not Do So Again
By David Cottle
Fundamental Australian Dollar Forecast: Bearish
All of the factors that have weighed on it over the past year remained very much in place. Some of them even intensified. The huge differential in monetary policy between a still-tightening Federal Reserve and a Reserve Bank of Australia stuck in post-crisis accommodation mode was as obvious as ever. Trade-war fears appeared to intensify, stocks tanked, and the International Monetary Fund downgraded its global growth call. That should have mattered to the growth-linked Australian Dollar’s fortunes at the best of times but, in the process, the IMF also trimmed its China forecasts. Of course, China mattes hugely to Australia’s export machine.
It even failed to slip much when RBA Governor Lowe said in Indonesia that he and his colleagues welcomed the current bout of US Dollar strength and hoped for more ‘spillover effects from it,’ by which me must assume that he meant an even-weaker Aussie.
However, there is a plethora of likely data points for Aussie traders this week, from domestic employment data and the leading index through official Chinese growth numbers. While job creation is likely to remain strong, this fact alone may not be enough to support the currency. Indeed, it has failed to do so all year.
A neutral call is tempting this week, but it just doesn’t quite work given all the known risk events and the likelihood of some unknown ones, probably from the global-trade story’s direction. It’s another bearish forecast, but a cautious one.
What To Expect From Netflix’s Q3
By Trefis Team
Netflix is scheduled to announce its third quarter results on Tuesday, October 16. In the first half of 2018, the company’s revenues increased 40% year-over-year (y-o-y) to $7.6 billion, largely driven by growth in subscribers across both the U.S. and international streaming markets.
Netflix saw its stock gain nearly 50% in 2017 and is already up around 70% year-to-date. We have maintained a $370 price estimate for Netflix’s stock, which is 10% ahead of the current market price.
We expect Netflix’s subscriber growth to gain momentum in 2018, driven by the fact that the company is spending a significant portion of its content budget on original shows. The company has a long-term goal of ensuring that nearly 50% of the content streamed on its platform is original. We expect Netflix to benefit from healthy subscriber growth, which should lead to improved cash flows and can, in turn, allow the company to invest further in content.
We expect the company to report revenues of around $4 billion, based on strong adoption in international markets. Furthermore, we anticipate that the total subscriber base for both international and U.S. streaming services could grow to over 135 million during the quarter.
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