Highlights
– US consumer inflation, consumer spending (US CPI Report), and Fed speakers to guide the markets on the Fed rate path.
– The Pound could be in for a choppy week, with wage growth, inflation, and retail sales in focus.
– Mid-week stats from China will influence commodity currencies and the appetite for riskier assets.
The US Dollar
On Tuesday, we kickstart another big week for the US dollar with the US CPI Report. This CPI Report could have a significant impact on the December Fed interest rate decision, especially after several Fed pivots. The fate of the Fed rate path may be dictated by the CPI Report.
Wednesday will bring us retail sales figures, which will also be pivotal. If there is an upward trend in consumption, it could fuel demand-driven inflation and push the Fed towards a more hawkish rate path.
Thursday’s weekly jobless claims will draw investor interest. Tight labor market conditions support wage growth, which in turn fuels consumption and demand-driven inflation. A more hawkish Fed rate path would raise borrowing costs and reduce disposable income, impacting spending and dampening inflation.
Other stats to keep an eye on include producer prices on Wednesday, NY Empire State Manufacturing Index on Wednesday, industrial production on Thursday, Philly Fed Manufacturing Index on Thursday, and housing sector numbers on Friday. While these numbers may have less influence, it’s still important to consider producer prices.
In addition to the numbers, it’s crucial to monitor Fed speakers throughout the week. We have Fed Vice Chair John Williams on Tuesday and Thursday, as well as FOMC members Christopher Waller on Thursday, Loretta Mester on Thursday, and Mary Daly on Friday, all scheduled to speak.
The EUR
On Tuesday, we need to consider the German ZEW Economic Sentiment figures for November. The markets are expecting a German recession, so any pickup in sentiment toward the economy could provide some relief for the EUR/USD.
However, the Eurozone GDP numbers for the third quarter will likely have more significance. We should also keep an eye on Eurozone industrial production and trade figures on Wednesday, followed by Eurozone inflation numbers on Friday.
If we see weaker-than-expected GDP, trade, and industrial production numbers, along with sticky inflation, it could affect sentiment toward the Eurozone economic outlook. Sticky inflation may force the ECB to pursue a hawkish interest rate trajectory, potentially at the expense of the economy.
It’s also important to consider ECB commentary. We have ECB Chief Economist Philip Lane on Tuesday, as well as Executive Board members Andrea Enria, Frank Elderson, and Luis de Guindos scheduled to speak throughout the week. ECB President Christine Lagarde will also speak on Thursday and Friday.
The Pound
It could be a choppy week for the Pound. On Tuesday, the UK labor market will be in the spotlight, with wage growth as a focal point. If we see an upswing in wages, it could fuel consumption and demand-driven inflationary pressures. These figures may influence market bets on the timing of a Bank of England (BoE) rate cut.
Wednesday brings us the UK CPI Report, which will also be influential. A marked softening in inflation could influence sentiment toward the BoE rate path.
To wrap up an important week for the Pound, we have UK retail sales. If we see an unexpected fall in consumption, it would ease demand-driven inflationary pressure and potentially reduce the need for a hawkish interest rate trajectory.
It’s crucial to pay attention to BoE commentary throughout the week, as the reaction to the numbers will influence buyer appetite for the Pound. BoE Governor Andrew Bailey and Chief Economist Huw Pill are scheduled to speak, along with several MPC members.
The Loonie
While wholesale sales and house starts will be in focus, the numbers are unlikely to have a significant impact on the Loonie. Instead, we should keep an eye on economic indicators from China, the weekly crude oil reports, and the OPEC monthly report.
On Friday, RMPI numbers for October will need consideration.
The Australian Dollar
On Tuesday, Australian business confidence figures for October will influence the appetite for the Aussie dollar. A pickup in business confidence could signal plans to increase staffing levels, which could fuel consumption and demand-driven inflationary pressures. A more hawkish Reserve Bank of Australia (RBA) rate path would raise borrowing costs, reducing disposable income and affecting consumption.
Wednesday brings us wage growth figures for the third quarter, which will move the dial. If we see a pickup in wage growth, it could signal a positive outlook for consumer spending.
However, we should also consider employment figures for October on Friday. Softer labor market conditions would ease wage growth pressures early in the fourth quarter.
It’s also important to note that economic indicators from China will impact the Aussie dollar.
The Kiwi Dollar
On Wednesday, electronic card retail sales figures will influence the appetite for the Kiwi dollar. If we see another pullback in sales, it could ease demand-driven inflationary pressures and potentially reduce the need for a hawkish Reserve Bank of New Zealand (RBNZ) rate path.
However, producer prices for the third quarter will likely garner more interest on Friday. Falling producer prices would signal a weak demand environment, which could influence consumer price trends.
Similar to the Australian dollar, economic indicators from China will also impact the Kiwi dollar.
The Japanese Yen
On Wednesday, GDP numbers for Q3 will kickstart the week for the Japanese Yen. If we see a deterioration in economic conditions, it could force the Bank of Japan to maintain an ultra-loose monetary policy stance.
However, we should also consider industrial production and trade data. Trade figures for October may have more impact on the Yen, especially if we see deteriorating trade terms that align with the Bank of Japan’s concerns about the economic outlook.
While the stats will certainly influence the Japanese Yen, it’s crucial to monitor BoJ commentary and intervention warnings as well.
Out of China
On Wednesday, industrial production, retail sales, unemployment, and fixed asset sales for October will be in focus. Recent private sector PMI numbers have signaled a deterioration in macroeconomic conditions.
Weaker-than-expected industrial production and retail sales figures could impact the appetite for commodity currencies and riskier assets.
Conclusion
In conclusion, this week will be filled with key economic indicators and central bank commentary that will guide the markets. In the US, consumer inflation, consumer spending, and Fed speakers will provide insights into the Fed’s rate path. The Pound could experience volatility with wage growth, inflation, and retail sales in focus. Mid-week stats from China will influence commodity currencies and the appetite for riskier assets. It’s important to pay attention to these developments as they will shape market sentiment and investor decisions.
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