WEEKLY MARKET SNAPSHOT 16/10-20/10|U.K. economic data will be closely analyzed, to gauge if the BoE has the ammunition to raise the base interest rate above 0.25% in November

Oct 13 • Is The Trend Still Your Friend • 50 Views • No Comments

There’s plenty of fascinating fundamental data to analyze this week, CPI (inflation) figures are published for many countries, china’s latest GDP growth is revealed, whilst arguably the U.K. will take center stage for a variety of reasons.

There’s a raft of economic calendar data to be delivered by the various authoritative bodies in the U.K., most notably the ONS will be delivering detail on: the latest CPI, retail price growth and various producer price inflation. Leading members of the BoE will be summoned to appear before a parliamentary select committee, to explain where they see the economy headed, which is of particular relevance given the clock is ticking on the issue of Brexit and the governor of the BoE and his colleagues, have suggested a rate rise could be announced on November 2nd.

Sunday starts the week with an unusual economic calendar event, Janet Yellen, chair of the Fed, gives a speech on the economy and monetary policy in the afternoon (GMT) time. In the evening New Zealand’s performance services index is published, and late evening the U.K. receives its latest house price index metric, from the private selling firm Rightmove, who list asking prices, not selling prices.

Monday begins with dairy auction results from New Zealand, these are key data results to watch, given how heavily N.Z. relies on dairy exports to Asia, and how the kiwi NZD (as a commodity currency), can be effected by such results. China’s economic performance and its hard data, appears to be less of a discussion point in The West’s mainstream financial media lately, the latest CPI figure for September is expected to fall to 1.6%, from 1.8% (YoY) in August. Europe has a respite from medium to high impact events on Monday, the USA likewise, Canada’s existing home sales for September should improve beyond August’s 1.3% reading. New Zealand’s CPI closes off the day’s significant calendar events; Q3 and yearly CPI data is released, with the quarter expected to be flat and the YoY figure forecast to stay close to the current 1.7% reading.

Tuesday’s key calendar events begins with Australia’s central bank (the RBA), publishing the minutes of its most recent rate setting and monetary policy meeting, thereafter, once European markets open, the focus will turn to the U.K. as various members of the U.K.’s BoE testify in front of a select committee. The latest series of inflation figures are published for the U.K. the CPI and RPI figures will be delivered together with various producer price inflation readings. The key reading to monitor is CPI, currently at 2.9%, particularly with the BoE intimating that the U.K. base interest rate needs to rise, in order to curb inflationary pressures. The latest Eurozone CPI data for September will be revealed, currently at 1.5%, there’s little expectation for a rise. Economic sentiment readings from ZEW, for both Germany and the Eurozone, will be carefully monitored for any signs of softening confidence. The USA publishes a series of economic hard data on Tuesday, most notably import and export price growth figures, industrial/manufacturing production and the NAHB housing index.

Wednesday the focus is on the U.K. with the latest unemployment and employment data published, the forecast is for a fairly benign and stable set of results, which could reinforce the belief that the BoE will have more of the necessary ammunition to justify a rise in the U.K. base rate, when the MPC (monetary policy committee) meets on November 2nd. Data relating to the USA’s housing and mortgage market is published on Wednesday; mortgage approvals, housing permits and starts. Permits are forecast to fall from 5.7% to -3.3%, indicative of a seasonal reduction, as opposed to any reduced confidence in the sector. Late evening the USA beige book is published by the Fed, the day closes out with a raft of Japanese data, the key metric to monitor will be the merchandise trade balance figure for September.

Thursday morning witnesses Australia’s unemployment and employment data being published, the unemployment rate is expected to remain close to the current August figure of 5.6%. A significant series of data releases is published by China early morning, including the latest GDP figure; forecast to come in at 6.8% for Q3, a fall from 6.8%. Retail sales and industrial production figures are also revealed. As European markets open the U.K. reveals its latest retail sales figures, which showed a surprising 1% rise in August, analysts are predicting a fall in September’s sales figures, but the YoY figure to remain robust. The traditional weekly jobless claims and continual claim numbers for the USA will be scrutinized, given the negative -33k NFP jobs roll recently published, a result blamed entirely on the USA hurricane season.

Friday starts with New Zealand credit card spending data published early morning, before European markets open Germany’s latest producer price increases will be revealed. The governor of the bank of Japan, Mr. Kuroda will deliver a speech in Tokyo, which will take on more relevance and importance as Japan will go to the polls soon to vote in the election suddenly called by Abe. Eurozone current account detail is delivered, as is U.K. data on the public sector and overall government borrowing. Naturally, any deterioration will be looked upon through the prism of the BoE and it’s supposed intention to raise the base rate in November. Canada’s latest CPI figure will be published in the New York session, the expectation is for the YoY figure to remain at 1.4%. Canadian retail sales are also published, before we move on to USA data on existing home sales, which are forecast to fall by -0.6% in September, an improvement from the -1.7% fall recorded in August.

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