Will the CPI Crash the USD?
The most impactful releases of this week will fill the market with volatility and sharp movements.
Who Will Rule the US?
Information is not investment advice
The week will have the biggest event in the US political process over the last two years. How will the elections affect the Forex market? We covered the most important news of this week in this report.
Congressional Elections
November 8, all day.
The US House of Representatives Elections will happen on Tuesday, November 8. It will be part of the 2022 midterm elections during President Joe Biden’s current term. A total of 435 representatives from the two biggest parties will be reassigned according to the results.
There are two main parties in the US: Democratic, with Nancy Pelosi as a leader, and Republican, with Kevin McCarthy in charge. Since the previous elections in 2020, people have lost trust in the Democratic party. The level of support fell from 49 to 42, marking the wind of changes in the US political environment.
The elections may change the economic approach of the US significantly, thus changing financial market trends. The last one in 2020 resulted in a 5300-point rise of the EURUSD pair over the month.
- Any result will bring a lot of volatility in stocks, gold, and USD.
- A win for the Republicans may boost oil prices as they will likely stop oil sellouts.
Assets to trade: XBRUSD, XAUUSD, EURUSD, US500.
US CPI
November 10, 15:30 GMT+2.
The US Bureau of Labor Statistics will release its monthly Consumer Price Index (CPI) on Thursday, November 10, at 15:30 GMT+2. This index is an inflation measure, and markets consider it the month’s most important release.
Inflation in the US is at a 40-year high of 8.2%. Although the US had an inflation rate of 15% in 1980, the Federal Reserve already implied a much more hawkish monetary policy to control rising prices. At the last FOMC meeting, Fed chair Jerome Powell stated that markets might see even higher rates if price growth won’t slow. Therefore, this release is critical for USD, gold, and risky assets such as stocks and cryptocurrency.
Every CPI release creates immense volatility that favors scalpers and day traders. The last reading caused a 1500-point soar in EURUSD.
- If the actual numbers exceed expectations, USD will rise.
- Otherwise, USD is likely to plunge.
Assets to trade: EURUSD, USDJPY, USDCHF.
UK GDP
November 11, 9:00 GMT+2.
The UK Office for National Statistics will release its monthly Gross Domestic Product (GDP) change on Friday, November 11, at 9:00 GMT+2. This data represents a change in the total value of all goods and services produced by the economy.
The previous Prime Minister (PM), Liz Truss, resigned after 44 days of ruling the country, leaving a bruised economic and political field after her. Now it’s for the new PM, Rishi Sunak, to decide how to respond to the GDP data.
As Great Britain is now under probably the heaviest political turmoil in decades, every new event in the country’s economy significantly impacts political decisions, thus affecting the GBP more than usual.
High GDP reading has a beneficial effect on the currency and vice versa. For example, lower-than-expected reading on October 12 resulted in a 500-point slide of the GBP.
- If actual numbers are greater than expected, GBP will rise.
- Otherwise, GBP will fall.
Instruments to trade: GBPUSD, EURGBP, GBPJPY.
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