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30.10.2007 - Currency and Stock Markets Weekly Outlook

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Date: 2007-10-30 11:11

This week is going to be very important for the currency and equities markets. As usual, the first Friday of the month will bring us the US labor market data. Investors attention will be focused on the interest rate announcement in the US and Poland.


There is no need to explain the importance of the Federal Open Market Committee’s decision on Wednesday. Analysts forecast that the Fed will make another interest rate cut, this time by 25 basis points to 4.50%. The American economy is not performing as expected and decreasing the federal funds rate might be the solution. Also on Wednesday, Polish investors will find out the new level of interest rates. The Polish Monetary Policy Council is expected to keep the main interest rate at 4.75%. Not so long ago, analysts were expecting a hike since inflationary pressures (increasing wages, falling efficiency) were endangering the economy. Still, an interest rate increase in Poland is possible till the end of the year.

Interest rate statements are not the only important reports this week. On Wednesday, the US will report its GDP (Expected: 3.1% Q/Q) and the GDP Deflator (2.0% Q/Q). Readings are expected to be lower than the previous ones confirming the slowing US economy. Thursday will bring the ISM Manufacturing Index along with the Core PCE Prices, the report the Fed pays most attention to. Friday will be the day of the labor market data. The most publication, Non-farm payrolls is expected to show 82K new jobs in that sector. Also, reports showing Average Hourly Earnings and the Unemployment Rate (Expected: 4.7%) will be published. The Euro zone will be in the shadow of the US this week. Worth attention will be Euro zone’s Unemployment Rate (Expected: 6.9% on Wednesday). Investors betting on the Australian dollar will also wait for Wednesday when Australian Retail Sales and Trade Balance will be published.

This is still the time of quarterly reports publications by worldwide companies. Their results can affect investors’ confidence and the performance of US indices. This week we can expect results of BASF, Procter & Gamble and UBS (Tuesday); Alcatel, Deutsche Bank, Sanofi Aventis, JDS, Metlife, (Wednesday); ABN Amro, Astrazeneca, Credit Suisse, Eastman Kodak, El Paso, Exxon Mobil (Thursday); and Unilever and International Paper (Friday).


Adam Narczewski