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Inflation figures from the UK and US set to dictate price action

Last week ended with US data hitting expectations and showing that the economy is in a good place. US Retail sales on Friday raised to its highest in three months as it forecasted at 0.6%, showing consumer confidence in spending has returned from a previous decline seen in August. With the Producer Price Index (PPI) also posting a strong 0.3% adding to a rise in what producers sell, this indicates that this could see overall inflation for the US pick up and push ever closer to the Fed’s 2% target. Overall, the view of the markets in reflection of this good data bolsters a rate rise coming in December’s Fed meeting.

Monday 

This morning, the Eurozone will post their yearly CPI figure as the European Central Bank have implemented further QE this year in order to help tackle slow growth and deflationary pressures. This release will be observed to see if it does remain at the expected 0.4%. The head of the ECB Mario Draghi is set to speak later this evening from Frankfurt, where any comments made about monetary policies could see volatility for the Euro.

Tuesday 

Inflation comes into focus as the UK and the US release their figures. Firstly, the UK publish the yearly CPI gauge. With Sterling recently crashing to 31 year lows, prices are expected to jump to 0.9% from 0.6%.  If seen, this will raise the question of the BoE’s next move and if it will see the MPC members to raise rates rather than cut them again.  From across the pond the monthly CPI number is also due to increase to 0.3% from the previous month’s 0.2%.  A number higher than this could see the greenback strengthen, as the quicker inflation pushes towards the Fed’s goal of 2%.

  • UK CPI y/y
  • UK RPI y/y
  • UK PPI y/y
  • US CPI m/m

Wednesday 

Overnight, China the world’s second largest economy gave further insight into their growth prospects as the GDP is set to remain at 6.7% whilst Industrial production is due to increase to 6.4.  With demand slowing from China over the past year this has impacted the global growth therefore all data from China is monitored for indications of a continued slowdown or possible growth.  The UK’s labour market comes into focus as average earnings, claimant count and the unemployment rate is released.  Unemployment and average earnings are anticipated to remain constant, but an increase in unemployment is expected to show a slight increase of 3.4k from 2.4k.

  • China GDP
  • China Industrial Production y/y
  • UK Unemployment Rate
  • UK Claimant Count Change
  • UK Average Earnings
  • US Building Permits

Thursday 

The main event will be the European Central Banks rate decision followed by the press conference led by Mario Draghi, head of the ECB.  Although no changes are expected, the current rate or QE programme, investors will be watching comments made by Draghi, specifically for any mention of Brexit and article 50 being triggered next year.  With the demise of Sterling already seen, experts will look to see how Mario Draghi will respond to what or how this may be affecting the Eurozone.  Meanwhile, consumer spending from the UK is forecasted to increase for September as retail sales is due to increase to 0.3%.

  • UK Retail Sales m/m
  • Euro ECB meeting
  • US Existing Home Sales

Friday

The week ends on a tame note with no high tier data on the docket.  The UK release the Public Sector Net Borrowing with expectations for the budget surplus to post 8.6bn, a decrease from the 10.1bn registered last month. 

  • UK Public Sector Net Borrowing