All Eyes on Stock Markets on Friday

However, major equity indices did not create new swing lows, implying a possible reversal today as many analyses expect a bounce due to heavily oversold conditions.

Should that happen, sentiment in the markets could improve heading into the weekend, likely undermining the US dollar and benefiting other assets such as commodities or bonds.

Later today, the EU inflation data are on the agenda, expected to continue rising massively toward double digits. Moreover, the US PCE inflation indices will also be released, along with personal spending and income data.

Following the aggressive actions taken by the government and the central bank in the past few days, Bank of England Chief Economist Huw Pill stated that "it's impossible to resist the conclusion that fiscal easing proposed will elicit a strong and appropriate monetary policy reaction in November."

As a result, the GBPUSD pair jumped 3%, rising back above the psychological 1.10 level. However, November is still far away, and if the BoE disappoints investors, we could see another sharp sell-off.

Chinese data remain weak

In China, the country's manufacturing sector surprisingly expanded in September, according to official Chinese PMI statistics. However, a private study revealed that the industrial sector's drop widened in the month following ongoing COVID lockdown challenges.

China's non-manufacturing PMI also expanded more slowly in September than it had the month before, showing that the second-largest economy in the world was still experiencing difficulties.
 

Japanese stocks fall again

Despite better-than-expected industrial production and retail sales figures, Japan's Nikkei 225 was the poorest performing Asian stock market on Friday, down 2.1%. This year, the Japanese economy is anticipated to be severely impacted by a weaker yen and rising commodities costs.

The Nikkei was also expected to decline by around 8% in September, its worst month since March 2020, when the COVID-19 epidemic started to spread.