Currency markets continue to show volatility, and there are a plenty of tier-1 events which should be treated as market-movers. The ECB, Bank of Japan and Bank of Canada will announce rate decisions. We’ll also get a look at a range of GDP and inflation reports.
German and eurozone Manufacturing PMIs beat their estimates, with readings of 58.0 and 54.4, respectively. Both readings were well into expansionary territory, above the 50-level. It’s a different story in the services sector, where German and eurozone PMIs indicated contraction, with readings of 48.9 and 46.2, respectively.
In the UK, employment numbers were a mix. Jobless claims fell to 28.1 thousand, which was much better than the estimate of 78.8 thousand. The unemployment rate climbed to 4.5%, up from 4.1%. Wage growth improved to 0.0%, after three successive declines.
China’s GDP rebounded in Q3, with a gain of 4.9%. This was up from 3.2% in the second quarter. The consensus stood at 5.4%. In Australia, the RBA signaled in its minutes that it would cut rates at next week’s policy meeting. This would likely mean a trim from 0.25% to 0.10%.
In the UK, a strong CPI release sent the pound sharply higher on Wednesday. CPI rose to 0.5% in September, up from 0.2% beforehand. The core reading accelerated to 1.3%, up from 0.9%.
In the US, jobless claims were excellent, falling to 787 thousand, down from 898 thousand beforehand. This was the lowest level since March, prior to the spread of Covid-19, which sent unemployment levels skyrocketing. Manufacturing PMI came in at 53.3, just shy of the estimate of 55.5 points. The Services PMI improved to 56.0, beating the estimate of 54.7 points. Both readings indicate expansion, above the 50-level which separates contraction from expansion.
- Australia Inflation Report: Wednesday, 00:30. CPI in the second quarter showed a decline of 1.9%, the first decline since 2016. Trimmed CPI, which excludes the most volatile items in the headline release, also posted a rare decline, with a read of -0.1%. The headline figure is expected to bounce back in Q3, with a forecast of 1.5%. Trimmed CPI is projected to show a small gain of 0.3%.
- BoC Rate Decision: Wednesday, 14:00. The Bank of Canada slashed rates to 0.25% in March has maintained this level. With the economy showing signs of a recovery, the central bank is not expected to make any changes. If the rate statement indicates that members are optimistic about economic conditions, the Canadian dollar could improve.
- German Prelim CPI: Thursday, All Day. Inflation in Germany has fallen off sharply. CPI has posted three straight declines, with a reading of -0.2%. We now await the September data.
- ECB Rate Decision: Thursday, 12:45. The ECB is likely to maintain rates at 0.00%, so the focus will be on the rate statement and press conference with ECB President Christine Lagarde. Any discussion about deflation or the high value of the euro could affect the movement of the currency.
- Bank of Japan Rate Decision: Thursday, Tentative. No change in policy is expected from the BoJ, which has stubbornly kept to an inflation target of 2 percent, which is well above current inflation levels.
- German GDP: Friday, 7:00. Germany’s economy plunged 10.1% in Q2, but a strong rebound is projected for Q3, with an estimate of 6.9%.
- Eurozone Inflation Report: Friday, 10:00. Deflation remains a major headache for eurozone policymakers. CPI has posted two straight declines and another decline of 0.3% is expected in October. The core reading is projected to remain at 0.2%.
- Canada GDP: Friday, 12:30. Canada releases its GDP reports on a monthly basis. In July, the economy slowed to 3.0%, down from 6.5% beforehand. We now await the August release, which should be treated as a market-mover.
- All times are GMT