On Wednesday EU CPI came at the expected 2.1%, which confirmed the economists’ expectations that the ECB will unwind the asset purchase program planned later in 2018. The core inflation including energy, food, tobacco and alcohol prices rose to an annual rate of 0.9%. The target inflation rate of European Central Bank is close to, but just below 2% and it is expected that on the meeting next week, ECB will keep the interest rates on hold.
We have also received the reading from the UK, where the inflation dropped to a three month low in September. The CPI rose to an annual rate of 2.4% in the previous month, which was below the consensus for a 2.6% raise. The core CPI excluding energy, food, tobacco and alcohol costs rose by 1.9% in September, while the forecasts were for a raise of 2.0% and compared to the 2.1% in August. The release affected the pound which had extended the losses, being affected already by the Brexit negotiations.
From the US, home building plunged more than expected in September, where the housing starts fell to a seasonally adjusted annual rate of 1.2 million, whereas the forecast was 1.22 million. The Commerce Department stated that the starts in the South of the country fell by 13.7% due to Hurricane Florence, leading the construction activity to the highest fall in the last 3 years. In addition, the building permits fell by 0.6%, coming to a rate of 1.24 million units on September.
According to Reuters, the housing market has been a weak spot in the strong US economy, where the economists are blaming the sluggishness on rising mortgage rates that have combined with the higher house prices and have made the home purchasing unaffordable for some first time buyers, as the 30 year fixed mortgage rate jumped 19 basis points to 4.90% last week, which is the highest level since mid-April 2011.
ECONOMIC CALENDAR EVENTS FOR OCTOBER 18th
AUD Employment Change
AUD Unemployment Rate
JPY BOJ Gov Kuroda Speaks
EUR German WPI m/m
EU EU Economic Summit
GBP Retail Sales m/m
USD Philly Fed Manufacturing Index
USD Unemployment Claims
USD FOMC Member Quarles Speaks
