All Eyes On ECB

Although, US Core CPI and upbeat Consumer Sentiment fueled the US Dollar advance during later weekdays, the greenback failed to secure positive weekly closing as early week looses, mainly caused by weaker Retail Sales, PPI and speculation concerning delayed Fed interest rate hike, pulled the USD down during last week. The Euro lost a bit more of its weight near week-end as one of the ECB policy maker favored need of QE extension while the GBP rallied considerably after a drop in unemployment rate and better than expected earnings growth. Further, the JPY remained volatile enough due to risk on-off mode, coupled with the talks for additional BoJ easing, and the commodity currencies extended their up-moves with a rise in commodity prices, mainly driven by the crude and gold.

During early Monday, Chinese GDP and Industrial Production fueled the forex market as the GDP, even after being higher than the forecast, grew slowest since 2009 while the Industrial production missed the consensus and registered the slowest growth since April. With fewer economic details scheduled during the current week, monetary policy meetings by the ECB and the BoC are likely to gain major attention by the market players. Moreover, US housing market details, Japanese Trade Balance and RBA meeting minutes are some other events/releases that could continue fueling this week's forex moves.

US Housing Numbers To Help Foresee USD Moves

Given the recent strength of the greenback, backed by improved economics, absence of headline economic releases could continue fueling the uncertainty concerning further USD moves. However, important housing market numbers for the world's largest economy may help determine near-term trend of its currency, namely the US Dollar.

Amongst the headline housing details, Building Permits & Housing Starts, are scheduled for publish on Tuesday and signal not much of the difference than their previous announcements. The Building Permits are expected to mark 1.16M against 1.17M prior while the Housing Starts are likely improved to 1.14M versus its 1.13M release announced during September. Further, Existing Home Sales, scheduled for Thursday release, bears an optimistic consensus of 5.38M against its 5.31M reading published last month. In addition to the housing market details, weekly reading of Jobless Claims, scheduled for Thursday as well, becomes the leftover from US economic calendar. The labor market gauge is expected to rise to the highest level in three week's with 266K as compared to last week's 255K reading.

Dearth of headline US economics could continue fueling uncertainty relating to the USD strength and than for the Fed's next move; however, better housing market numbers may provide intermediate strength to the greenback.

Will ECB Liquidate Recent EUR Strength?

With the recent flash of negative EU CPI, speculations concerning the need for QE extensions have rallied, providing noticeable Euro losses. However, this week's monetary policy meeting by the European Central Bank (ECB), on Thursday, will be crucial in order to forecast the future of QE and the regional currency, EUR, in-turn.

Last Thursday, the Final reading of EU CPI matched its initial -0.1% estimate, the lowest since March, and fueled concerns that the regional economy needs another push to sustain recent global market pessimism. Moreover, one of the influential ECB policymaker, Ewald Nowotny, also favored the need for QE extension to help the Euro-area economy. Hence, this week's ECB meeting becomes crucial in order to foresee the future of QE and the Euro as well.

Even if the regional central bank isn't expected to alter its current monetary policy, inability on the part of the ECB President, during his press conference following the rate announcement, to hide the recent economic weakness and need for further monetary measures could signal QE extension in near-future, forcing the regional currency to liquidate some of its near-term gains. However, continued bold statements by the ECB President, coupled with negating the immediate need of further monetary easing, can extend the recent EUR advances unless economic data-points signal otherwise.

In addition to the ECB meeting, Flash readings of Manufacturing and Services PMIs for Germany and EU, scheduled for release on Friday, can also help forecast the immediate EUR moves. While both the PMIs are likely being lesser than their previous readings, the forecast favor more than 50 mark to print and still support expansion of these activities. However, an actual reading below 50 could provide considerable damages to the regional currency.

GBP Moves To Depend On UK Retail Sales

Absence of front-line UK economics force the GBP moves to depend upon the monthly reading of UK Retail Sales, scheduled for release on Thursday. Forecasts concerning the same favor the rise in UK Retail Sales growth to test highest level in five months, to 0.3% versus its 0.2% prior. With the recent improvement in UK labor market details, an actual retail sales matching the consensus may help GBP extend its recent northward trajectory.

BoC And Canadian Economic Numbers Become Crucial For CAD Players

Recent strength in Crude prices, Canada's main export, helped the Canadian Dollar (CAD) extend its gain series, making the Bank of Canada (BoC) less expected to alter its current monetary policy during its Wednesday's meeting. However, China continues to be on its losing streak and keep flashing red signals for the commodity currencies, including CAD, and hence, a surprise rate cut by the Canadian central bank or a dovish tone of the Governor, in press conference following the rate announcement, can't be ruled out. Moreover, monthly reading of Canadian Retail Sales and the CPI, on Thursday and Friday respectively, are also important readings that could help determine immediate CAD trend.

As the Canadian Retail Sales and CPI have been cutting down off-late, another downbeat reading by them could trim some of the recent CAD gains. Moreover, a surprise rate cut by the central banker, which is less expected, and /or a dovish message sent by the central bank Governor could make the Loonie, as it is nicknamed, decline heavily against majority of its counterparts.

Details/Events From The Rest Of the Global Economy

Other than the ECB and BoC, those are likely to direct this week's forex moves, Wednesday's Japanese Trade Balance and RBA Meeting Minutes, scheduled for release on Tuesday, are rest of the details that could fuel this week's forex volatility.

Off-late talks concerning the need of additional monetary easing to the Japanese economy have gained momentum and Wednesday's Trade balance for the export oriented country will be important to forecast JPY moves. The consensus favors a cut in Trade deficit to -0.07T against the -0.36T prior; however, details relating to comparative advance/decline in export-import numbers will be crucial. Should the Trade details of export oriented country remain sluggish, mainly due to Chinese pessimism, speculation concerning the additional monetary easing announcement during late October BoJ meeting gets strengthened, pulling back the JPY. However, global economic uncertainty may continue favoring the safe haven demand of the Japanese currency, limiting its further downside.

Reserve Bank of Australia (RBA) again refrained from altering its monetary policy during its recent meeting; however, the Chinese market, Australia's main consumer, keep witnessing the economic hurdles and continue signaling need of RBA to apply monetary easing. Hence, minutes of the recent RBA meeting becomes important as to know what exactly have been restricting the central bank from further monetary easing. If the minutes sound a bit more worried, chances of immediate AUD declines can't be denied.

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