Last week was quite busy, highlighted by central bank decisions, inflation and key employment data. The upcoming week will focus on PMIs, which are important gauges of the health of the manufacturing and services sectors. As well, Federal Reserve Chair Powell will testify before a Congressional Committee about the economic impact of Covid-19. The Eurozone continues to struggle with low inflation levels. CPI declined by 0.2%, down from 0.4% in the previous release. It marked the first decline since April 2016. The core reading slowed to 0.4%, down sharply from 1.2%. In the UK unemployment claims dipped to 73.7 thousand, down from 94.4 thousand beforehand. Wage growth declined for a third straight month, falling by 1.0%. However, the unemployment rate rose to 4.1%, up from 3.9%. Inflation slowed to just 0.2% in August, down from 1.0%. The core reading fell to 0.9%, down from 1.8%. The Bank of England maintained rates at 0.10%. There were some jitters in the market as the BoE said it was looking at the option of negative rates, and the pound briefly lost ground as a result. At the Bank of Japan policy meeting, the Bank of Japan pledged to maintain its ultra-accommodative monetary policy. Although the economy is gripped by a recession, the central bank sounded somewhat optimistic about the economic recovery. In Australia, the RBA minutes noted that Covid-19 had caused a severe downturn in the economy, but nevertheless the economy was showing signs of recovery. Employment numbers sparkled in August. The economy created 111.0 thousand jobs, defying the forecast of -40.0 thousand. As well, the unemployment rate fell to 6.8%, down sharply from 7.5%. Canada’s headline inflation reading dropped by 0.1%, its first decline in four months. On the employment front, ADP nonfarm payrolls came in at -205.4 thousand, but the Canadian dollar managed to hold its own despite this disappointing release. In the US, the highlight was the Federal Reserve policy meeting. As expected, the Fed kept interest rates close to zero. Of more interest to investors was the Fed message that it will not raise rates before 2023, under its new inflation target, which allows inflation to overshoot 2% without triggering a rate hike. US retail sales slowed significantly in August. The headline reading dropped to 0.6%, down from 1.2%. Core retails sales came in at 0.7%, down sharply from 1.9%. This points to weakness in consumer spending, which is a key driver of economic growth. Eurozone PMIs: Wednesday, 7:15 in France, 7:30 in Germany, and 8:00 for the whole eurozone. In August, German and eurozone manufacturing PMIs pointed to very slight expansion, with readings of 52.2 and 51.7, respectively. The French index came in at 49.8, just below the 50-level, which separates contraction from expansion. The Services PMIs for all three countries were in the low 50’s pointing to slight expansion. Little change is expected in the September releases. UK Flash Manufacturing PMI: Wednesday, 8:30. The PMI has hovered just above the 55-level for the past two months. This is well above the 50-level, which separates contraction from expansion. The August estimate is 54.3 points. UK Flash Services PMI: Wednesday, 8:30. The index has rebounded in impressive fashion, with a reading of 60.1 in August. Back in April, the index came in at just 12,3, pointing to sharp contraction. The forecast for August stands at 57.1 points. US Manufacturing PMI: Wednesday, 13:45. The PMI has been showing slight expansion, with readings slightly above the 50 level, which separates contraction from expansion. The forecast for September stands at 52.5 points. US Services PMI: Wednesday, 13:45. The index pushed into expansion territory in August with a reading of 54.8. This was its first reading above 50 in seven months. The estimate for September is 54.5 points. Fed Chair Jerome Powell Testifies: Tuesday, 14:30. Powell will testify before the House Financial Services Committee and discuss the Fed’s moves to help the economy as it struggles with the Covid-19 pandemic. All times are GMT Kenny Fisher Kenny Fisher Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer. Kenny's Google Profile View All Post By Kenny Fisher MajorsUS Dollar ForecastWeekly Forex Forecasts share Read Next US to slap sanctions on over two dozen targets tied to Iran arms FX Street 1 year Last week was quite busy, highlighted by central bank decisions, inflation and key employment data. The upcoming week will focus on PMIs, which are important gauges of the health of the manufacturing and services sectors. As well, Federal Reserve Chair Powell will testify before a Congressional Committee about the economic impact of Covid-19. The Eurozone continues to struggle with low inflation levels. CPI declined by 0.2%, down from 0.4% in the previous release. It marked the first decline since April 2016. The core reading slowed to 0.4%, down sharply from 1.2%. 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