Source: ForexYard
With the upcoming Nov.2 -3 FOMC meeting and the speculation of expansion of quantitative easing by the Federal Reserve the main focus of the markets, this week’s economic data is expected to have great effect on investors’ expectations.
The main indicators to watch are the Housing and Consumer Confidence publications. The housing market, which was at the heart of the financial crisis, remains a drag on the economic recovery of the U.S as well the poor consumer confidence, mostly driven by the relentlessly high unemployment rate.
However, some stability may be finally evident in the embattled industry. According to Monday’s report, the sales of U.S. existing homes rose in September by the most on record with purchases increasing 10% to a 4.53 million annual rate from 4.12 million in August. Further indication of a rebound in the housing industry may come from tomorrow’s report of New Home Sales which is also expected to show an increase from the previous month. While the industry’s recovery will likely be dragged as the unemployment rate is forecasted to remain above 9% throughout 2011, it seems that the industry has already hit bottom.
Consumer confidence may also see some recovery this week as the CB Consumer Confidence which was released earlier today, rose more than expected. A similar rise in confidence is expected from the revised UoM Consumer Sentiment report, due Friday at 13:55 GMT. The increase in confidence may coincide with next week’s mid-term elections which are expected to see Democrats losing their majority in Congress.
The USD has been seeing a shaky recovery this week, aided by the positive data releases. A continuation of better than expected data releases throughout the week will likely boost the USD further, mainly by adding greater uncertainty to the quantitative easing expansion speculations. With the FOMC meeting minutes release on Nov. 2nd and the mid-term elections on Nov. 3rd, next week is expected to be very volatile for the USD and its crosses.
Forex Market Analysis provided by ForexYard.
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