The US Dollar came on top in a turbulent week that saw a divided government in the US Mid-Terms, the Fed decision, Brexit developments, and more. What’s next? The US inflation and retail sales stand out in the upcoming week. Here the highlights for the next week.
Democrats won the House and Republicans retained the Senate. The US Dollar lost some ground after some volatility, but the moves remained limited. The US ISM Manufacturing PMI beat expectations and held up above 60 points, indicating robust growth. In the UK, reports of an imminent Brexit deal swirled since the weekend but the lack of real progress eventually weighed on the pound. The Italian crisis continued engulfing the euro. Oil prices tumbled down as US oil output reached new highs.
- UK jobs report Tuesday, 9:30. Britain enjoyed an acceleration in wage growth back in August: 2.7% y/y. Salaries have the most significant impact in the UK employment report as the unemployment rate is at a low of 4% as of September. Wages carry expectations for an acceleration to 3% y/y while no change is forecast in the jobless rate. The Claimant Count Change, or jobless claims, rose by 18.5K in September, a disappointment. A more moderate rise of 4.3K is projected for October.
- Japanese GDP: Tuesday, 23:50. Japan enjoyed a growth rate of 0.7% q/q in Q2 2018 according to the final read. The upbeat growth rate comes hand in hand with a low unemployment rate but inflation is not picking up to the frustration of the Bank of Japan. The preliminary figure for Q3 is released now. A drop of 0.2% is projected.
- German GDP: Wednesday, 7:00. We have already learned that the euro-zone economy slowed down in Q3: 0.2% according to the first release. However, the publication did not include Germany, the largest country. The locomotive of Europe grew by 0.5% in Q2 and a slowdown is likely in Q3 with a potential for an outright contraction of 0.3%. A significant deviation will impact the update for the euro-zone GDP due at 10:00.
- UK inflation: Wednesday, 9:30. Inflation has cooled down and decelerated in recent months. Higher wages and a slower pace of price rises have resulted in growth in real wages. The Consumer Price Index stood at 2.4% in September. A small acceleration is projected now: 2.5% y/y. Core CPI was at 1.9% wand the same number is on the cards now. The Retail Price Index (RPI) stood at 3.3% and 3.4% is on the cards for October.
- US inflation: Wednesday, 13:30. The US Consumer Price Index hardly moved in September: both the CPI and Core CPI rose by only 0.1%. The small monthly change resulted in annual Core CPI, the most important measure, getting stuck at 2.2%. Has inflation picked up in October? Headline inflation is projected to rise by 0.3% m/m and core CPI by 0.2%.
- Australian jobs report: Thursday, 00:30. Australia saw only a small gain in jobs in September: 5.6K, a disappointing outcome that weighed on the Aussie. And while the unemployment rate dropped to 5%, it went hand in hand with a drop in the participation rate, so it does not bode well for the economy. A substantial increase of 20.3K is expected for October with the unemployment rate moving up to 5.1%.
- US retail sales: Thursday, 13:30. Consumption is critical to the US economy. Shoppers were cautious in September with a rise of only 0.1% in headline sales and as core retail sales dropped by 0.1%. We will now receive the fresh figures for September. According to recent consumer confidence figures, an increase in the volume of sales is likely. The headline number is projected to rise by 0.6% and core sales by 0.5%.
*All times are GMT
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