Central banks meetings, Euro CPI and US GDP in focus

On Monday, the dollar fell, struggling to hold near the support level of 93.50 as traders weighed inflation expectations and rate hikes outside the United States. While German IFO is awaited, EURUSD is heading up from its support at 1.16200 toward the hurdle of 1.16660 due to the weaker dollar.

Events of the week

The Australian inflation data due on Wednesday will likely set the tone for the upcoming battle between traders and a dovish central bank.

The Canadian central bank sees a tapering in the frame when officials meet on Wednesday due to surging housing costs and rising food and fuel prices, while oil hit a new three-year high on Monday and lent support to the Canadian dollar.

In the US, there will also be reports on durable goods orders on Wednesday, initial jobless claims, Q3 GDP growth on Thursday, and personal income and expenditures on Friday.

Among Friday's data are the core PCE price index, known as the Fed's preferred measure of inflation.

Despite the high inflation rate in the US, Thursday's GDP growth figures are seen to show a slowdown that could take some pressure off the Fed.

GDP growth is expected to slow to 2.8% from 6.7% over the past three months.

The delta variant, rising prices, supply chain disruptions, and labour shortages all played a role in decelerating the growth rate. Still, those effects are expected to fade in the fourth quarter.

BoJ and ECB meetings

The Bank of Japan and the European Central Bank will hold their monthly meetings on Thursday, and policies are not expected to change. It appears that ECB President Lagarde is more likely to push back on market jitters regarding an early rate rise due to a discrepancy between the market gauges of inflation and the banks' guidance.

In support of her stance, this week's October CPI data for the Eurozone due on Friday should show YOY inflation comfortably close to the target at 1.9%.

Following Thursday's policy meeting, Christine Lagarde’s press conference should provide investors with some insight into December's decision.

Evergrande escaped a default

On the sidelines, the market follows the troubles at China Evergrande Group after the company avoided a default by making a last-minute payment of bond coupons last week. The Evergrande debt crisis affects the broader Chinese property sector, which makes up about 30% of the economy, resulting in a string of default announcements, rating downgrades, and slumping corporate bonds.