Week of 12 October: the last inflation report before the Fed

The Fed meets on 28 October, and this week brings the last US inflation report before that decision. The Fed raised rates in September, its minutes pointed to another hike by year end, and markets are now weighing whether that hike comes in October or waits until December. Wednesday's consumer price report and Thursday's retail sales are the two releases most likely to move that debate. Below is what is scheduled, what markets expect, and what each event means on a challenge account. This is a calendar, not a forecast: we do not say which way anything will move.

Where the week starts

Friday's close left EUR/USD at about 1.120, its fifth weekly loss in a row. Gold ended the week at about $4,220 an ounce, up about 1% on the week, and Brent at about $104. USD/JPY started Monday near 158.40, after nearly two weeks in a narrow range between about 156.40 and 158.50. The US Dollar Index has risen for four weeks and sits near 102.40. The Fed's target range is 3.75% to 4.00%.

Monday is Columbus Day in the US. The bond market is closed and there are no major US releases, so liquidity in dollar pairs can be thinner than usual.

The calendar

Times are server time (UTC). Previous and consensus figures are from public market reports at the time of writing.

Fed Chair Kevin Warsh is scheduled to speak on Thursday, and ECB President Christine Lagarde and Bank of England Governor Andrew Bailey both speak several times during the week. Speeches have no consensus figure, which makes them harder to prepare for than a data release.

Wednesday: consumer prices

Headline inflation is expected to rise to 3.6% from 3.4%, with a 0.6% monthly gain driven mainly by energy: Brent has traded above $100 for weeks. Core inflation, which leaves out food and energy, is expected at 0.2% for the month and 2.5% for the year. Some previews argue that a core reading of 0.3% or more could revive bets on an October hike, while 0.2% would leave December as the more likely date. Five and a half hours later, the Beige Book gives the Fed's own regional picture of the economy.

Thursday: a crowded morning

Thursday starts early. Australia's jobs report comes out at 00:30 server time, during the Asian session, when AUD pairs can move on thin liquidity. UK GDP for August follows at 06:00, expected to show a small contraction after July's 0.4% gain.

At 12:30 four US releases land at the same moment: retail sales, producer prices, the Philadelphia Fed survey and jobless claims. Retail sales are expected to slow to 0.3% after a 1.2% jump in August. When several releases come out together and point in different directions, the first minutes can be erratic, with sharp moves both ways before the market settles.

Friday: a quieter close

Friday has import prices and industrial production, both usually smaller events. After two days of inflation and spending data, any shift in expectations for the 28 October meeting will likely have happened by then.

What the week means on a challenge account

• News trading is allowed, with limits. You may open, modify or close positions around scheduled announcements. The company may restrict trading shortly before, during or right after high-impact events. Any restrictions and restricted event lists are published in your dashboard (Challenge Rules 6.5). Check it before Wednesday's CPI and Thursday's 12:30 cluster.
• No bracketing the release. Placing a buy stop and a sell stop around the CPI report to catch the first spike in either direction is news bracketing, and it is prohibited (Challenge Rules 7.2(a)). A position based on your own view of the market is fine.
• Size against the day, not the balance. On a $50,000 Sprint the daily room is $2,000. A $30 move in gold is $3,000 on one lot, and an inflation surprise can move gold more than that in minutes. See why 1% risk is a quarter of your day.
• Early and late releases sit close to the reset. Australia's jobs report comes out 30 minutes after the day resets at 00:00, so a loss taken then counts against the new day from its first hour. The rollover period runs from about 23:55 to 00:15, when trading is allowed but execution can be worse (Challenge Rules 6.7). See how the daily drawdown limit works.
• Spreads and slippage count. Around releases, on a holiday Monday and at rollover, spreads can widen and fills can slip. Both go into floating equity, which is what the daily limit watches (Challenge Rules 6.8).
• The weekend. Positions can be held over the weekend, and the daily limit applies on weekends too (Challenge Rules 6.6). With oil still sensitive to news from the Middle East, a gap at Monday's open counts like any other move.

Next

On Friday after the close we will look back at how the week actually played out.