Forex Market Forecast for October 2024: Key Central Bank Meetings and Economic Indicators
As we move into October 2024, the forex market is poised for significant shifts following the recent decision by the US Federal Reserve to cut interest rates by 50 basis points. This month, traders should closely monitor the actions of other central banks and the impact of upcoming political events and economic data releases. Here are the key points to watch:
European Central Bank (ECB) Meeting on October 17
The ECB is set to meet on October 17, and market participants are eager to see whether the central bank will maintain its current monetary policy or implement another rate cut. Recent economic data has shown signs of weakness and slowing inflation in the Eurozone, leading major financial institutions like Goldman Sachs and JPMorgan to predict a potential quarter-point cut. If the ECB decides to hold rates steady, the euro may stabilize against the US dollar. Conversely, another rate cut could reverse the current uptrend of the euro.
Bank of Japan (BoJ) Policy Meeting on October 31
On October 31, the Bank of Japan will hold its policy meeting, and traders will be watching closely to see if the BoJ will raise rates after keeping them steady in August and September. With Japan having raised rates twice this year, the market anticipates further tightening. According to Stefan Angrick from Moody’s Analytics, a rate hike in October could bolster the Japanese yen's strength.
US Presidential Election Impact on Currency Volatility
The upcoming US presidential election on November 5 is expected to introduce additional volatility into the forex market. As the election date approaches, traders will be assessing the economic implications of the potential winner, which could lead to fluctuations in the US dollar. A recent Reuters poll indicates that most economists expect the Fed to cut rates by an additional 25 basis points in November, further contributing to the dollar's volatility this month.
British Pound Outlook
The British pound has shown resilience, rising above the 1.34 mark in September. Analysts suggest that while the pound may continue to trend upwards, sustaining this bullish momentum could be challenging. The Bank of England has adopted a cautious approach, maintaining its current stance in September. However, ING analysts warn that if lower wage and price expectations begin to surface in official data, the BoE may have to reconsider its position, potentially leading to quicker rate cuts by December.
Conclusion
In summary, October 2024 is set to be a pivotal month for the forex market, with crucial central bank meetings and the looming US election influencing currency movements. Traders should remain vigilant and prepared for potential volatility as these events unfold. Keeping an eye on economic indicators and central bank decisions will be essential for navigating the forex landscape this month.