FUNDAMENTAL REVIEW FOR THE WEEK (21 - 25 October 2024)

Volatility on global markets continues to fade due to the lack of strong news and statistics "on the horizon". However, there is still quite a lot of geopolitical tension "in the air".

In particular, China is actively discussing a possible military takeover of Taiwan, which worries global markets. Although Chinese officials have stated that peaceful reunification remains the preferred option, threats of military intervention remain "on the table", especially in light of recent publications in state media. Military aggression from China could instantly disrupt the stability of global markets and return that very "degree of volatility" to them.

Also, things are still not calm in the Middle East - Israel continues to prepare a military "response" to Iran's actions, but it will most likely happen after November 5, when the United States delivers missile defense systems to Israel.

As for the economy, several rather important financial reports are planned for the coming week, such as the publication of business activity indices (PMI) in the Eurozone, the UK and the US on Thursday. Also expected are weekly unemployment data in the US, which could impact expectations for a Fed rate cut.

Also in the spotlight is the meeting of the Central Bank of Canada on Wednesday. The country of the "maple leaf" is expected to ease monetary policy by 0.50%, although a strong report on the Canadian labor market does not suggest such a sharp step, a more conservative option of 0.25% should not be ruled out either. In this scenario, this could support the Canadian dollar at the moment.

The political struggle in the US between Trump and Harris also continues to affect the markets, since changes in the candidates' ratings can have long-term economic consequences.