The week will kick off with the U.S. ISM manufacturing PMI on Monday, followed by the Australian RBA rate statement and cash rate and the U.S. JOLTS job openings on Tuesday.

Wednesday will be the busiest day with the RBNZ rate statement and official cash rate, the ADP non-farm employment change and ISM services PMI in the U.S. and the OPEC+ meetings.

Friday we'll get the U.S. non-farm employment change, the unemployment rate and average hourly earnings m/m, as well as the employment change and unemployment rate for Canada. A few Fed members are also expected to deliver their remarks.

In the U.K. there was a lot of debate about an intermediary rate hike, but it is unlikely that the BOE will act before the November meeting.

After the U.K.'s mini-budget announcement by Chancellor Kwasi Kwarteng the BOE was forced to intervene to calm down the market volatility.

UK Treasury Committee Chairman Mel Stride urged the Chancellor to publish the Office of Budgetary Responsibility (OBR) forecast before its scheduled date of Nov. 23rd.

On Friday, PM Liz Truss and Chancellor Kwarteng met with the OBR, which issued a statement saying an initial forecast is to be provided to the Chancellor on October 7 which "will, as always, be based on our independent judgment about economic and fiscal prospects and the impact of the Government's policies."

The ISM manufacturing PMI for the U.S. this week might print lower after a period where it was stable around 52.8 due to a likely decline in manufacturing activity caused by weakening domestic and global demand for goods.

The RBA meeting is expected to be a quiet one.

The bank is likely to continue its pace of tightening in order to keep up with the pace of other central banks globally. At this meeting a 50 bps rate hike is probable, but November and December could see only 25 bps rate hikes.

For New Zealand, 80% of analysts expect RBNZ to deliver a 50 bps rate hike and 20% expect a 75 bps rate hike.

Governor Orr stressed at the last meeting that further rate increases are possible.

According to Citi analysts this meeting is likely to have a hawkish message due to the record-high demand for labour in the country and they believe a 50 bps rate hike will also follow in November and a final 25 bps rate hike in February next year to reach a terminal rate of 4.25%.

According to the WSJ, OPEC+ is considering reducing output by 1 million barrels a day due to the decline in demand fuelled by the economic slowdown.

Some indication that oil production cuts are on the table is the fact that the meeting was changed from a video conference one to an in-person event in Vienna.

The ISM services index has seen the highest growth in four months in August, when it rose to 56.9 driven by a rise in business activity and new orders.

The service sector accounts for a large share of the U.S. economy, so its changes can be seen as reflecting the economy as a whole.

Analysts expect a strong reading of 56.5 for the September print this week, but Wells Fargo believes the index is likely to dip over the next few quarters as the tightening monetary policy starts impacting the service sector.

The U.S. nonfarm payrolls saw an increase of 315K at the reading last month and the labour market continues to be strong.

The consensus is for a 265K increase in this week's report.

According to Wells Fargo, the Fed is looking for a cooldown in labour demand in order to decelerate wage growth which is now inconsistent with the 2% inflation target, but not a big enough drop that it would tip the economy into recession.

The data for Canada is expected to reflect a decline in September, as we saw in August, but Citi analysts believe it's too soon to see sustained job losses due to cooling demand caused by the tightening monetary policy.

This week BoC Governor Macklem will deliver a speech regarding the outlook for the economy and inflation and traders will be paying attention as it can provide clues about the number and size of future rate hikes. Otherwise, the meeting itself is less likely to cause volatility.

USD/CAD expectations

The pair closed the week near the 1.3815 level of resistance.

From there a correction is likely until the 1.3510 level of support. The USD is expected to strengthen in the near future against the CAD. A risk for this trade could be this week's OPEC+ meetings so it's worth keeping an eye on oil price as the CAD is sensitive to it.

On the H4 chart a bearish divergence seems to be forming that could suggest a bigger correction if the fundamentals align. Overall, USD/CAD should present buying opportunities this week.

On the upside the next level of resistance is at 1.3970.

market outlook

This article was written by Gina Constantin.