A1 Trading

Caution: 3 Big Catalysts Tomorrow

October 11, 2022
Michael J. Donoghue
Caution: 3 Big Catalysts Tomorrow

Transpiring between 2 am and 2 pm Eastern Time, the forex market will be subjected to several bits of significant economic news on Wednesday, October 12th. Because of these potential fundamental catalysts, there is a chance that financial markets will experience substantial volatility accordingly. Let’s explore what this news could be and how it may influence price action as we exercise caution: 3 big catalysts tomorrow will be pulling no punches, after all.

Catalyst #1: United Kingdom GDP

At 2 am ET, the UK’s Office for National Statistics will report any month-over-month change in the UK’s Gross Domestic Product (GDP), a key measurement of economic output. A change of exactly 0% is currently forecast. If it is revealed that the UK’s economy in fact grew, this could be bullish for GBP, perhaps making the cautious Bank of England more comfortable with rate hikes. However, if the real numbers indicate a contraction, GBP could plummet against other currencies, ushering in a return to recent instability.

Catalyst #2: United States PPI

At 8:30 am ET, the US Bureau of Labor Statistics will make public the month-over-month change in the Producer Price Index (PPI), which measures changes in the prices of goods and services sold (a mode of gauging inflation). An increase of 0.2% is currently expected. If the real numbers exceed expectations, this will be bullish for USD, and feed into the Fed’s hawkish narrative. However, if the report fails to meet this forecast, it could theoretically be bearish for USD, though it may take a lot of economic cooling for the Fed’s aggression to be tempered.

Catalyst #3: United States FOMC

AT 2 pm ET, the Federal Reserve will release the meeting minutes from the Federal Open Market Committee’s (FOMC) latest meeting. While we will not have concrete numbers to work with as with the other potential catalysts, these documents are extremely important for market fundamentals, since the FOMC is the portion of the Fed that sets monetary policy. If their minutes come across as hawkish, USD bullishness may likely continue, while an unexpected dovish change of tune could easily prompt a bout of USD bearish momentum.

Three Potential Pairs to Trade

Here are three possible pairs to trade for those desiring to capitalize on tomorrow’s potential catalysts. Each is reviewed favorably for either GBP bears and/or USD bulls by the EdgeFinder, A1 Trading’s market scanner tool; they are listed below with their respective ratings, biases/signals, and corresponding charts.

1) GBP/USD (Earns a -5, or ‘Sell’ Rating)

Caution: 3 Big Catalysts Tomorrow
Caution: 3 Big Catalysts Tomorrow

2) AUD/USD (Earns a -5, or ‘Sell’ Rating)

Caution: 3 Big Catalysts Tomorrow
Caution: 3 Big Catalysts Tomorrow

3) USD/JPY (Earns a 4, or ‘Buy’ Rating)

Caution: 3 Big Catalysts Tomorrow
Caution: 3 Big Catalysts Tomorrow

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