The EURUSD rally continued to extend through September reaching the big psychological number 1.2000. The main driver behind the EURUSD rally is mainly the shift in ECB’s rhetoric towards the EU zone’s monetary policy. The market has been speculating that the ECB will announce this autumn the tapering process of the 2.3 trillion euro bond buying program. The market focus is now shifting to a new month – October which can provide us with plenty of fundamental drivers that can impact the market volatility and the EURUSD exchange rate. The October economic calendar has scheduled plenty risk events that can be the catalyst for some volatility. Both the ECB and the Fed have important interest rates and monetary policy announcements. The Fed has one of the last chances to signal its willingness to hike one more time until the end of the year, while the ECB can clear some of the uncertainties around the QE program. The October seasonal pattern sees the EURUSD exchange rate being stuck in a monthly consolidation zone, so traders should not expect much trend development. The seasonal pattern only gives us the tendency of a particular currency to exhibit a certain behavior at a certain time, so we have to carefully monitor the pattern and how the fundamental forces interact with the price action. Going forward, we’re going to analyze and disseminate the major news event for the upcoming month that can be the catalyst for higher EURUSD volatility.

“Don’t risk significant money in front of key reports, since that is gambling not trading.” Paul Tudor Jones

Monthly Forex News Events that Might Affect EURUSD Volatility – Oct  2017

EURUSD Risk Events

The EURUSD exchange rate seems unable to break above 1.2000 as every time it goes bid above, the ECB is on the wires sending it back. Besides the monetary policy risk events, we can also note some important geopolitical events that can disrupt the EURUSD volatility. Namely, we have the Catalan independence referendum, which can set the stage for one of the most severe constitutional crisis.

• Sunday, October 1, 2017 –The regional Government of Catalonia has scheduled a referendum over the Catalonia independence. The Spanish constitutional courts have ruled that such a referendum is illegal and even in an event of a Yes vote there is a lot of uncertainty around the legality of the independence referendum that can set the stage for a crisis in the EU zone which ultimately can affect the EUR/USD exchange rate.
• Wednesday, October 4, 2017 – The Non-monetary policy’s ECB meeting will give us further insights into the timing of the tapering process.
• Thursday, October 5, 2017 – The ECB Monetary policy meeting accounts will provide us with further updates on the EU economic outlook and the ECB projection of inflation and growth prospects.
• Friday, October 6, 2017 – The Non-farm Payrolls are again one of the first major risk events of a new month. Last reading of the job report numbers was very disappointing as the unemployment rate rose to 4.4% versus 4.3%, while the NFP number only came in at 156k. Based on the market consensus we should expect a reading in the vicinity of 200k new jobs added during the previous month.
• Wednesday, October 11, 2017 – The FOMC minutes will reveal more insights into the previous Fed meeting. The Fed has already signaled that interest rates will continue to go higher and it sets the stage for another rate hike by year-end. Further dollar strength can be provided as the market will try to discount the new rate hike.
• Friday, October 13, 2017 – The US CPI inflation figures accelerated in the last months reaching 1.9 annualized rates. Inflation is part of the Fed’s dual mandate and is important when deciding to raise interest rates so it can produce some volatility.
• Wednesday, October 18, 2017 – The EU extraordinary Economic summit will gather together prime ministers and heads of states to discuss the current EU economic issues.
• Thursday, October 26, 2017 – The ECB interest rate decision is probably one of the highlights risk events of the month because it can Mario Draghi can signal the start of the tapering process in the coming months and give a timeline which is something that the market is eagerly looking for.
• Monday, October 30, 2017 – The US GDP preliminary figures for the Q3 of 2017 is scheduled to be released. Hurricane Irma can have a negative impact on the upbeat US GDP forecasts. Wall Street analysts are expecting the US economy to grow by 2.9% during the current quarter.