Financial markets will follow the latest developments in the US-China trade war, with a delegation from China coming to the United States this week for a new round of trade talks.
Minutes of the US Federal Reserve meeting will also be closely watched, in light of the uncertainty regarding interest rates in the coming period amid fears the US economy may relapse into recession and slowdown in global growth.
Dollar awaits crucial week
This week, the US dollar's movements are expected to depend on any developments related to the trade war with China, as well as the impact of the minutes of the US Federal Reserve meeting.
U.S. President Donald Trump said last week: "We are in very good shape; I have a lot of options on China. But if they don't do what we want, we have tremendous power."
Recently, there was optimism regarding the possibility of seeing a trade agreement between the two sides, especially after they agreed to return to the negotiations table.
As for the minutes of the Fed meeting for September, traders are expected to look for details of the vote by members of the FOMC after they decided to cut interest rates again by 25 basis points.
It is possible that markets will explore trends within the FOMC to see if there is a possibility of more rate cuts during the last quarter of the year.
By taking a look at the economic calendar, the most notable report is the U.S. consumer price index, inflation gauge, which may indicate a 0.2 percent rise in September and an acceleration to 1.9 percent from 1.7 percent year-on-year.
Euro should get clues from ECB minutes, data
The minutes of the European Central Bank monetary policy meeting will probably be the most important for the euro this week as it will give an in-depth look at the economic conditions that have affected the latest ECB decision.
The ECB decided on September 12 to reduce its deposit facility rate by 10 basis points to -0.50 percent and restart the bond purchases program at a monthly pace of 20 billion euros.
Markets will await the latest economic data from the euro area economic to track the most recent economic developments within the euro region, amid the undergoing global economic slowdown, trade risks and Brexit uncertainty.
The euro area will release several reports, including industrial production, economic confidence and trade balance.
Political situation continues to set pound trajectory
The pound managed to rebound slightly against the U.S. dollar last week, benefiting from the green currency’s decline after the release of weak economic data from the world’s biggest economy.
The pound's movements this week may depend on the latest political situation in Britain, as it remains the main driver to the sterling amid the uncertainty surrounding the process of exiting the EU.
As for the economic data, the U.K. will release its monthly industrial production, trade balance and GDP for the month of August.
Trade talks outcome to weigh on commodities
Gold rose on growing concerns about slowing global growth and the US dollar's decline, as the precious metal managed to hover above the psychological level of $1500 an ounce.
This week, gold prices will depend on the latest developments in US-China trade talks, as well as the impact of the FOMC minutes on the U.S. dollar.
Regarding oil, crude prices posted their biggest weekly loss since July last week, amid fears of a decline in demand for crude oil due to slowing global growth and after Saudi Arabia had announced the restoration of full oil production, following last month's attacks on its facilities.
Oil prices movements will be contingent on optimism or pessimism in the
market should there be any developments in the US-China negotiations, taking
into consideration the relevance of the U.S. government's weekly report
tracking crude inventories.