Week ahead: Packed central bank calendar as tech earnings roll on

Earnings dominated market attention last week as the macroeconomic calendar offered relatively few releases, with Meta, Tesla and SpaceX among the companies reporting results.

Technology shares sold off as negative free cash flow at Meta and Tesla raised doubts about whether higher capital expenditure on AI infrastructure could be sustained.

Against a backdrop of continuing tensions and conflict in the Middle East, oil prices rallied, taking Brent to a five-month high of $113 a barrel.

This week, attention shifts to central bank decisions and the UK budget, while another round of big tech earnings will also be in focus.

FOMC rate decision – could a hawkish hold weigh on Gold?

An unchanged policy stance is expected when the Federal Reserve announces its rate decision on the 28th. A hike is not yet fully supported by the data, and with midterm elections scheduled for the following week, the Fed needs to maintain a low profile.

Fed Chair Warsh and officials including John Williams have taken a measured approach to communication despite CPI of 3.7% and PPI of 6.3%. Their message has been that current conditions do not justify tightening more frequently than once a quarter. The Fed therefore remains comfortable waiting for now. Markets will scrutinise Warsh's post-decision comments for any hawkish signals, which cannot be ruled out. Pricing continues to imply a 78% probability of a December hike.

Adding to the uncertainty, releases of core PCE and Q3 GDP could either reinforce or reverse the market's response to the Fed meeting.

Should the Fed deliver a hawkish hold and core PCE and GDP exceed expectations, dollar bulls could regain momentum, putting downward pressure on gold towards 3,940 and the 2026 lows.

ECB rate decision: how much will French debt concerns matter?

Ahead of its rate decision on the 29th, the ECB has already delivered two hikes in recent months. June's increase brought the deposit rate to 2.25%; a further 25-basis-point rise followed in September after higher energy prices pushed inflation back above 3%. At 3.8%, headline inflation is now at its highest in three years.

While a further increase before year-end remains possible, the ECB must contend with the risk that higher rates could weaken eurozone economic growth. Policymakers have indicated that another hike may be ahead, but few have offered a clear timeline. October looks unlikely given the limited evidence of mounting wage pressures, leaving December as the most likely point for the next move.

That outlook could change if developments in France require the ECB to intervene to narrow spreads. French budget discussions are expected to run over the coming weeks, while the growing gap between French and German yields is fuelling fears of another eurozone debt crisis. Markets will closely monitor ECB President Christine Lagarde for any indication of concern about bond market movements.

EUR/USD could find support from a hawkish hold coupled with any signal from Lagarde of a December hike. Even so, the path of least resistance for the pair remains lower towards 1.11.

Can safe-haven demand support the yen as the BoJ holds rates?

Following September's hike, the BoJ is expected to maintain interest rates at 1.25%. Its October meeting is nevertheless likely to bring an upward revision to the fiscal year 2027 inflation forecast, as higher oil prices continue to pass through to consumer prices.

At 2.1% year-on-year in September, Japanese core inflation exceeded the Bank of Japan's target for the first time since December. Inflation in goods prices accelerated as well, reaching 2.8%.

Although these figures bolster the argument for a December hike, market pricing does not fully reflect a 25-basis-point increase until January. Hawkish remarks from Governor Ueda could consequently support the yen, especially if the Fed takes a more dovish position or U.S. data falls short of expectations.

Safe-haven demand has supported the Japanese yen over the week. Further gains could follow if results from big tech companies, including Alphabet, Microsoft and Amazon, scheduled for the 28th and 29th, deepen concerns about the scale of AI spending and the returns it generates.