After much pent-up anticipation, the US Federal Reserve and the Bank of England are respectively due to make key announcements this week. These central bank meetings are coming in a week that also features these major economic events and data releases:

Monday, November 1

• Manufacturing PMIs for China, Australia, Eurozone, UK, US
• USD: US October ISM manufacturing

Tuesday, November 2

• AUD: RBA policy decision, weekly consumer confidence

Wednesday, November 3

• CNH: China October composite and services PMIs
• EUR: Eurozone September unemployment, October composite and services PMIs
• USD: Fed rate decision
• US crude: EIA weekly US crude oil inventory report

Thursday, November 4

• Brent: OPEC+ meeting
• EUR: ECB President Christine Lagarde speech
• EUR: Germany September factory orders, Eurozone September PPI
• NOK: Norges Bank rate decision
• GBP: BOE rate decision
• USD: US weekly initial jobless claims

Friday, November 5

• AUD: RBA monetary policy statement
• EUR: Eurozone September retail sales, Germany September industrial production
• USD: US October nonfarm payrolls
• CAD: Canada October unemployment

Entering this week, GBPUSD had broken below its 50-day simple moving average support level and is testing the March/April support region around 1.3670. The US dollar surged before the weekend as markets ramped up their expectations for a Fed rate hike happening by June 2022, while expectations for a Bank of England hike happening this month were unwound.

As such, here are the broad expectations for the Fed and BOE meetings this week:

• The Fed is expected to formally announce its tapering decision, beginning the process of unwinding its US$120 billion in monthly asset purchases that had supported the US economy since the pandemic. This tapering should then pave the way for US interest rates to be moved higher.
• Markets are now less sure about a UK rate hike being announced on 4th November, assigning just a 43% chance at the time of writing, compared to the 60% chance given about a week prior (as of 22 Oct). However, a December hike by the BOE remains fully priced in.

Overall, a hawkish Fed coupled with a BOE that delays its expected rate hikes would be a bearish outcome for GBPUSD.

Conversely, a BOE that presses ahead with a November hike, alongside a Fed that delays its tapering announcement, could see GBPUSD racing back towards its 200-day SMA resistance level.

US jobs report is another key catalyst for the USD

As if these highly-anticipated central bank decisions aren’t enough, then there’s also the headline-grabbing, market jolting, US nonfarm payrolls report due Friday. Markets are forecasting 450,000 jobs were added in the world’s largest economy last month. Recall that for the past two monthly US jobs reports, the official figures had far disappointed markets.

Should this be a case of “third time’s the charm” and the NFP surprises to the upside instead, that should translate into higher Treasury yields and a stronger dollar, much to the dismay of the rest of the FX world.

OPEC+ to stay patient

Another crucial decision in the coming week pertains to oil supplies out of OPEC+. Overall, markets are expecting the cartel to stick to its intended output hike of 400k barrels, even though there’s increasing pressure from the US government and other major oil-consuming nations for OPEC+ to pump out even more oil to satiate the surging global demand, especially in these colder months.

An unlikely surprise out of the OPEC+ meeting could shock global oil benchmarks.

With oil bulls clearly lacking that extra bit of confidence to push Brent past its October 2018 peak, traders clearly need fresh reasons to push prices higher.

Overall, it’s set to be a busy week that could rock the pound, US dollar, and even oil prices, depending on how big of a surprise is dealt to the markets.

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