After the current week’s central bank rollercoaster, the following week also becomes very interesting yet somewhat less flamboyant.

RBNZ is due to deliver another interest rate decision after last month’s shock 50 basis points cut and is expected to remain on hold. On the political front, developments in the US-Sino trade negotiations and Brexit are expected to keep market participants on the edge of their seats. As for financial releases, albeit quite enough are due out, Purchasing Manager’s Index from a number of countries and especially in the Eurozone seem to be setting the modus vivendi for the week.

USD – US-Sino talks in the spotlight

US-Sino trade negotiations have started once again after a break of about two months and are still ongoing. It would be indicative that Larry Kudlow, the economic advisor of the US government, had stated to Fox news “there’s a little softening in the air” sparking hope for some progress. Currently negotiations between the two delegations are to be extended into Friday and are being conducted at mid-level. In a strange twist, Chinese delegates are to extent their visit in the US and visit farms, something that analysts tended to explain as an effort to build goodwill. Farm products were in the agenda for the Chinese delegation for some time now, and actions to agree upon the specific products are intensifying. We could see headlines about the issue rising over the weekend and should developments show that progress is being made, despite US President Trump’s recent comment that he is not interested in an interim deal, we could see a risk on sentiment strengthening in the markets. On the monetary policy front, after the second rate cut in a row by the Fed, we could see worries settle for a bit. That is unless repo madness takes over once again the US market. Pressure is growing on the Federal Reserve to be more aggressive in addressing the strain in U.S. funding markets, especially as swap spreads dropped on Thursday. Further actions from the NY Fed are expected even today, to address the issue however should there be further stress down the road, we could see them being repeated in the coming week as well. Other than that, we tend to concentrate on statements from Fed policymakers which could include comments about their individual views regarding the level of interest rates. As for financial releases albeit many are expected from the US, we tend to focus on September’s consumer confidence, the final GDP growth rate for Q2, August’s trade balance figure, August’s consumption rate and Core PCE price index. In addition, the durable goods orders growth rates for August.

GBP – Brexit in the forefront

After the latest developments on Brexit, pound traders seem to pick up on confidence somewhat. Main reason cited for yesterday’s jump, was that media reported EU Commission President Juncker stating in an interview that a deal for Brexit is possible by October 31. Media also reported that Irish Prime Minister Varadkar stated that he would be meeting with Boris Johnson in New York next week “to try to get a deal”, while German Chancellor Merkel seems to have similar plans for the UN general assembly. Should the developments show that the Brexit impasse is breakable, we could see the pound strengthening further as pound trader’s confidence may be increasing. As for financial releases, after the release of the decelerating inflation rate for the UK on Wednesday, we expect a rather quiet week, with CBI trends for September standing out. As for the monetary front, after the widely expected BoE interest rate decision to remain on hold at +0.75% on Thursday, Saunders’s speech on Friday could be catching the trader’s eye. Please note that the lack of both significant financial releases and monetary policy events, tends to underscore the prementioned dominating Brexit influence over the pound.

EUR-Preliminary PMI’s eyed

After last week’s interest rate decision, Mario Draghi is to deliver a speech at a conference in Frankfurt next week and could be gathering most of the market’s interest for the common currency on the monetary front, next week. However, it should be mentioned that also De Guindos, Lautenschlager, Coeure and a number of other policymakers are to speak as well. In the political stage, the Spanish elections are still far away and are unlikely to affect the common currency at the current stage, despite headlines sprouting here and there. Political developments in Germany are also still ongoing with a distinct environmental flair, while the possibility of the US sanctions to be levied over European cars, is an ever present threat for the common currency as articles reminded us today. As for financial releases, its going to be an early start this week for EUR traders as the area’s preliminary PMI’s for September are due out on Monday and tend to gather substantial interest, especially Germany’s PMI reading for the manufacturing sector. Other than that, Germany’s Ifo Business climate for September, GfK Consumer Sentiment for October, France’s preliminary CPI (EU Normalised) rate for September and Eurozone’s economic sentiment reading for September, could be closely watched for the common currency and the prospects of the area’s economy.

NZD – RBNZ in the epicenter

With the kiwi keeping a clear downward trendline against the USD over the past week, next week’s outlook does not seem to be making any favours. The main event for the Kiwi next week is expected to be RBNZ’s interest rate decision, during Wednesday’s Asian session. Consensus is for the bank to remain on hold at +1.00%, after the shocking rate cut last month of 50 basis points. At the last release RBNZ officials seemed quite confident that the extensive cut should do the trick and provide the necessary boost for New Zealand’s economy. We could expect the bank to wait in order for the dust to settle down in the markets after the 50 basis rate cut formed previously. Yet the market seems unconvinced as the currently it may be expecting the bank to remain on hold at +1.00 in the September meeting, NZD OIS implying currently a 68.38% probability for the bank to do so. At the same time, it seems that another rate cut may be priced in by year’s end. The recent minor deceleration of the GDP growth rate for Q2, may be advising caution for the bank. Should the bank remain on hold as expected, the next question set would be regarding the accompanying statement. Should the bank adopt a more dovish tone, as to keep the door open for another rate cut in the November meeting, we could see the Kiwi weakening further. On the other hand should the bank decide to adopt a more neutral tone or positive view, in contrast to the market’s dovish expectations, we could see the bank strengthening the Kiwi somewhat. As for financial releases, New Zealand’s trade data are due out, with interest gathering around exports and the trade balance figure. Yet, the release could be overshadowed by RBNZ’s rate decision which is to follow a few hours later.