Bank of England and Non-Farm Payrolls in focus
Biggest economic events:
- Italian/Eurozone GDP – Tuesday
- Eurozone inflation – Wednesday
- Bank of England interest rate decision – Thursday
- US Non-Farm Payrolls – Friday
Overnight, Japan will release its September Retail Trade and Large Retailers’ Sales stats. In early European trade, the October 26th Swiss Sight Deposits figures will make their onto the market, just ahead of multiple British releases. The UK’s September Net Consumer Credit and Mortgage Approvals data will be out in the morning, amongst a few other low-tier figures. Attention will then turn to the US Personal Consumption Expenditure which will detail the amount of goods and services being bought. The annual figure sat at 2.0% in August, and a positive boost to the September reading could provide US Dollar gains as it would indicate higher levels of output growth. The UK’s budget will also be out; Phillip Hammond has said a no-deal Brexit will require a new budget as it would require a ‘different response’ with ‘fiscal buffers’ to support the economy.
Japan will print its September Jobless Rate overnight, as well as the Bank of Japan’s (BoJ) bond purchases. However, the focus will soon shift to the Eurozone as a slew of data reaches the market. The most important readings will come in the form of German labour market, Italian Gross Domestic Product (GDP), Eurozone GDP, and German inflation numbers. Markets are closely watching Italy to see if the nation continues to clash with the European Commission over its budget. The GDP reading will be closely scrutinised as the budget is built on Italy’s ambitious GDP forecasts. The government expects economic growth to exceed expectations significantly, to fund its costly welfare payments and tax cuts, alongside lowering the country’s debt. The populist government has insisted it wants to continue using the Euro, despite earlier election comments to hold an EU referendum, and markets will be watching to see if that remains the case. In the Stateside session, US Consumer Confidence will come into focus, with economists expecting a decline from 138.4 to 135.0.
The Japanese September Industrial Production and October New Zealand ANZ Activity Outlook will print overnight. The latest GfK Consumer Confidence figure will be published in the early hours, just ahead of Australia’s influential third quarter Consumer Price Index (CPI). Australian inflation sat at 2.1% in the previous reading. The Chinese Manufacturing PMI is another key figure to be released overnight, with the September reading residing at 50.8, just above the 50.0 benchmark which separates expansion from contraction. In the rest of the European morning, the Swiss National Bank (SNB) will release its Q3 2017 currency allocation while Credit Suisse prints its October Survey Expectations.
The Eurozone Unemployment Rate number will be out a little later, as well as the October Eurozone inflation reading which could prove to be a significant source of movement for the single currency. US MBA Mortgage Applications for the week through October 26th will be out, as well as the important Canadian growth stat. Growth in July came in at 2.4% on the year, expanding slightly quicker than expected after the second quarter printed the fastest pace of growth in a year. Last week, the Bank of Canada (BOC) hiked interest rates to 1.75%, the fifth rise since summer 2017 and its highest level in almost a decade. Although the central bank has suggested it wants to see how recent rate hikes affect the economy, a higher GDP reading could contribute towards more buoyant expectations of another hike in the near future. Wednesday will also see the October ADP Employment Change number released, which is usually seen as a precursor for Friday’s Non-Farm Payrolls event.
Australia’s Trade Balance number and China’s Caixin PMI will print overnight. Swiss data will take up some of the morning with the October Consumer Confidence stat, Consumer Price Index, and Manufacturing PMI reaching markets. British data will also be in focus when the Markit Manufacturing PMI prints. The afternoon could be more eventful when the Bank of England (BoE) makes its November interest rate decision. BoE Governor Mark Carney will be holding a press conference after, and his comments could have the ability to sway Sterling significantly. Last week, Carney dampened expectations of a May interest rate hike due to economic data, so investors are expecting the bank to stand pat on rates ahead of Brexit. Brexit negotiations and the deal the UK ends up with are Carney’s prime concerns in terms of keeping the economy stable. The data stream will continue in the afternoon with the Canadian RBC Manufacturing PMI, US Construction Spending, and the US ISM Manufacturing and Employment numbers.
Japanese Monetary Base and Australian Retail Sales figures will print overnight. The morning continues with Swiss Retail Sales and the UBS Real Estate Bubble Index. The UK’s Markit Construction PMI for October will also be out; the previous reading was the weakest rise in six months. In the North American session, the Canadian Unemployment Rate and Net Change in Employment figures will be released at the same time as the October US Change in Non-Farm Payrolls. Last month, payrolls disappointed coming in at a relatively lethargic 134K. However, the August figure had been positively revised higher which allowed US Dollar sentiment to remain relatively buoyant. The October number is predicted to show a 200K rise, and if it achieves that, US Dollar strength could be prevalent in the market.