Buckle Up: US Jobs, GDP, BOJ Decisions May Rock Markets This Week

On Monday (October 28th), at the end of the Asian session, the US Dollar Index maintained its intraday uptrend, currently hovering around 104.55; spot gold is currently near 2738 USD/ounce, down nearly 10 USD intraday.

Looking ahead to this week, investors are set to receive a plethora of significant US data, including the Non-Farm Payrolls report, GDP, and PCE inflation figures. Additionally, the Bank of Japan will announce its interest rate decision, and the Eurozone will release preliminary GDP and CPI figures, with these factors expected to trigger substantial market movements throughout the week.

Due to a series of positive US economic data, investors have reduced their expectations for the magnitude and speed of the Fed's rate cuts, with the US Dollar posting gains for the fourth consecutive week last week. The US Dollar Index (DXY), which tracks the US Dollar against six major currencies, rose by 0.25% on Friday, closing at 104.32, with a cumulative increase of 0.83% for the week.

As the Fed's November policy decision approaches, this week's data will serve as a timely update on the strength of the US economy and progress in inflation.

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The US Bureau of Economic Analysis (BEA) will release Q3 GDP figures on Wednesday. The US economy's annualized growth rate for Q3 is expected to be 3.0%, unchanged from Q2. FXStreet analyst Eren Sengezer noted that if the data exceeds market expectations, the immediate reaction could be to bolster the US Dollar and cause gold prices to decline. Conversely, disappointing GDP data (between 1% and 2%) could harm the US Dollar.

On Thursday, the US Bureau of Economic Analysis will release the September Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred inflation indicator. Currently, economists widely anticipate that the US September PCE Price Index will slightly decrease from 2.2% to 2.1% year-over-year, while the core PCE Price Index will drop by 0.1 percentage point to 2.6% year-over-year.

The US Bureau of Labor Statistics (BLS) will release labor market data for October on Friday. The current median forecast of economists surveyed by Bloomberg indicates that non-farm payrolls for October will be halved from 254,000 to 120,000, with the unemployment rate remaining unchanged at 4.1%. In recent public speeches, Federal Reserve Chairman Powell reiterated the importance he places on the job market.

Sengezer stated that if there is a significant downside surprise in the non-farm employment data, the market would reconsider the possibility of substantial rate cuts in November or December. If non-farm employment data reaches or falls below 100,000, the US Dollar could face heavy selling pressure, opening the door for gold to rebound before the weekend. Conversely, if non-farm employment data falls between 180,000 and 220,000, it could be seen as "good enough" data, and the Fed might opt for two rate cuts of 25 basis points before the end of the year. Lastly, if non-farm employment data approaches or exceeds 300,000, investors might question whether there will be a rate cut in December. In this scenario, gold could face significant bearish pressure.

Renowned institution XM.Com stated that since the Fed is now more concerned with the job market than inflation, weak employment data could bring the Fed's tone back to a more dovish level.

The Bank of Japan may maintain interest rates unchanged at this week's meeting and may also send fewer dovish policy signals. This is due to diminishing concerns over a US economic recession and the need to prevent speculators from excessively devaluing the Japanese Yen.In the Eurozone, the preliminary GDP figures released on Wednesday will show that the Eurozone economy barely grew by 0.2% quarter-on-quarter in the third quarter. On Thursday, market attention will turn to the preliminary CPI figures. The overall inflation rate for October may slightly rise from 1.7% to 1.9% year-on-year. XM.Com points out that stronger-than-expected data could provide some short-term relief for the euro after four consecutive weeks of decline. On the other hand, if the data is disappointing, investors will definitely increase their bets on a 50 basis point rate cut by the European Central Bank in December.

Kshitij Consulting Services Team writes on the trend of major currency pairs, and here are the main points of the article:

US Dollar Index

Currently, the US Dollar Index has broken through 104.50, and if it continues, it may test the higher resistance near 105-105.50, and then the trend is expected to peak. Overall, the US Dollar Index is likely to fall towards 103-102.50 in the medium term, either from the current level or after testing 105-105.50.

Euro/US Dollar

The Euro/US Dollar has retreated from its high of 1.0831. If it continues to decline, it may once again be dragged towards the support near 1.0770/50, and then rebound towards 1.0850-1.0900 in the medium term.

US Dollar/Japanese Yen and Euro/Japanese Yen

With the Japanese ruling coalition losing its majority in parliament, the US Dollar/Japanese Yen and Euro/Japanese Yen continue to rise. The market is currently speculating that the risk of more dovish economic policies is higher. Looking ahead, if the current upward momentum continues, these two currency pairs may test 154-155 and 168 in the short term, respectively.USD/CNY

In the near term, the USD/CNY continues to exhibit uncertainty. Potential targets on the upside are 7.1436 and 7.1751. Meanwhile, if the exchange rate fails to sustain above the current level, it could drag the rate downwards to 7.10 or even lower in the short term.

AUD/USD

The AUD/USD has already broken below 0.66, and if it does not rebound above 0.66 immediately, it may head towards 0.65 in the near term. Closely monitor the price action around the current level to see if the downtrend will continue.

GBP/USD

The GBP/USD continues to maintain stability within the range of 1.2900-1.3150 and may persist for a while. A decisive breakout towards either end of the range is needed to clarify the direction further.