The Week Ahead 22/10/12

22 October, 2012

The week ahead is full of activity with all eyes narrowing down on the U.S. Q3 Gross Domestic Profit estimate by the FOMC. Traders all over the world are eagerly awaiting the outcome as the U.S. Federal Reserve is planning its next move in the wake of a weak economy.

Interest Rate Announcement by the FOMC

The U.S. – Federal Open Markets Committee will be announcing the interest rates on Wednesday this week. The Federal Reserve has already made announcements about its plans on open-ended quantitative easing and the stand is unlikely to differ after Wednesday’s discussions. However, there might be some amendments made to the amount of assets to be purchased based on the economic state.

The recent U.S. labour and other reports have shown significant signs of improvement and also days are drawing nearer for the U.S. Presidential election. A reflection on all these events firmly suggests that the Federal Reserve is not likely to hold on to its commitments. FOMC’s stand on QE is likely to reduce the U.S. unemployment rate further while increasing the inflation. The market might see USD donning bullish attire for Wednesday and it might be a good strategy for your binary options to call on USD as the meeting begins.

Gross Domestic Product – U.K

The GDP or Gross Domestic Product determines the economic condition of a country. The U.K. GDP report is all set to be released this Thursday. The U.K. economy is finally showing some signs of improvements after facing a 3 quarter contraction. The quarter-over-quarter rate for the third quarter of 2012 is 0.6% as opposed to a 0.4% fall in the second quarter. A good GDP report this Thursday could increase the expectations of the traders and is also likely to lessen any more quantitative easing from the Bank of England. Bank your options towards improvements in GBP as traders are likely to get excited with the report.

The German IFO Business Climate Index and Eurozone Composite PMI

The German IFO Business Climate Index and the Eurozone Composite PMI are set to release this Wednesday. These early indicators are bound to draw a lot of investor attention as they can prove crucial to future business stances.

There is a speculation in the market about the Eurozone Composite PMI to improve by 0.4 to 46.5 for the month of October from its September value of 46.1. Even though the Composite PMI shows an improvement is would not be able to pull the Eurozone out of the clutches of a gripping contraction. The report is likely to continue a downcast atmosphere in the European markets. The German IFO Business Climate is also not likely to stir the markets as many predict that it would slip lower to 101.6 for the month of October.

Interest Rate Announcement by the Bank of Canada

The Bank of Canada will be announcing its rate of interest tomorrow. Earlier the Canadian Finance Minister and the Governor of the Bank of Canada have expressed their opinions on keeping the interest rates down despite all the market expectations about rate hikes. In view of all these events, it would not cause any surprise in the markets if the Bank of Canada leaves the rate at the same level as of now. There are also some speculations about the Bank of Canada coming up with more stringent policies in the year 2013.

It looks like the Canadian markets are not likely to get excited after the interest rate announcements unless the Bank of Canada increases the rates. So make sure you have the latest info while trading your binary options on the CAD.

The Japanese Consumer Price Index

The Japanese consumer price index is the most important report for the Japanese markets as it is a preferred means to gauge inflation by the Bank of Japan. The report is all set to be released later this week on Thursday. The Japanese inflation rate is predicted to remain well inside the territory of deflation. This might just make the Bank of Japan to do some easing during the 30th October meeting. This measure is likely to cause the Yen to experience additional growth in the days to come and also boost the lack lustre Japanese export industry.

The U.S. Gross Domestic Product

The U.S. GDP will be released later this Friday. The U.S. economy showed small signs of growth in the second quarter but the predictions for Q3 are quite optimistic with a 1.8% q/a. If the report shows a higher growth than the current estimates, USD would grow at a healthy rate and the Federal Reserve may have to cut short its duration for an open-ended quantitative easing. The USD is bound to remain strong this week.