Last week was not a rosy period for the markets. North Korea’s testing of the hydrogen bomb increased the geopolitical tensions and the possibility of the Hurricane Irma hitting the U.S. coast weighed down the U.S. markets. However, the extension of the debt ceiling in the U.S. until December eliminated the near-term risks and offered some consolation. European Central Bank’s announcement on Thursday during interest rate meeting that the plan on quantitative easing plans will be revealed in October and the up-gradation of the Eurozone GDP forecast to the highest rate since 2007 contributed to the EUR gaining ground against the USD and hitting the $1.20 level. It is expected that the heightened focus on these currencies would continue into the upcoming week.
Having said this, here is an outlook on some of the key releases scheduled for the coming week:
#1: U.K. CPI (09/12/2017 Tuesday 8:30 GMT)
In the U.K., the consumer prices increased by 2.6 percent on a year-on-year in July, maintaining the same pace in the previous month. However, the reading missed the analysts’ expectation for an increase of 2.7 percent. Prices increased in the clothing, gas and electricity, household goods, as well as food and non-alcoholic beverages sectors, while it rose at a slower pace in the transport, restaurants and hotels, and recreation and culture sectors. The core inflation rate (excluding energy, food, alcohol and tobacco prices rose by 2.4 percent, below analysts’ expectation for a 2.5 percent increase. Forecast for August: 2.8 percent increase
#2: U.K. Average Earnings Index (09/13/2017 Wednesday 8:30 GMT)
In the U.K., average weekly earnings, including bonuses, increased by 2.1 percent on a year-on-year basis to GBP 506 per week prior to tax and other deductions during the three months to June 2017 after the reading for the previous period was revised upward to an increase of 1.9 percent. The reading came in above analysts’ expectation for an increase of 1.8 percent driven by a 4.0 percent increase in bonus payments within the financial sector. If bonuses are excluded, the average earnings increase was 2.1 percent to GBP 474 a week. This was higher than the 2 percent increase reported for the prior period and analysts’ expectation of 2 percent increase. If adjusted for price inflation, the average weekly earnings, inclusive bonuses, declined 0.5 percent after the 0.6 percent drop reported for the previous period. This marked decline for three straight months. Excluding bonuses, the real earnings declined 0.5 percent, recording decrease fourth month in a row. Forecast for the average earnings growth per week for the three months to July: 2.3 percent
#3: U.S. PPI (09/13/2017 Wednesday 12:30 GMT)
In the U.S., the final demand goods producer prices unexpectedly fell by 0.1 percent on a month-over-month basis in July and missed analysts’ expectation of a 0.1 percent gain. In the previous month, the producer prices had increased by 0.1 percent. The producer prices declined for the first time in July since August last year. The cost of services declined by 0.2 percent, recording a decline for the first time since February, and goods prices were dragged down by 0.1 percent due to a decline in energy cost. If food and energy prices are excluded, the PPI decreased by 0.1 percent. This was below the forecast for a 0.2 percent gain. Forecast for August: 0.3 percent increase
#4: U.S. Crude Oil Inventory Change (09/13/2017 Wednesday 14:30 GMT)
In the U.S., crude oil stocks rose by 4.580 million barrels during the week that ended on August 31 after stocks fell by 5.392 million barrels during the previous week. The market had expected the crude oil stocks to increase by 4.022 million barrels. Crude oil stocks increased for the first time in ten weeks and at the sharpest pace since the week that ended on March 17. Gasoline stocks fell by 3.199 million barrels against analysts’ expectations for a decline of 5.0 million barrels.
#5: Australia Employment Change/Unemployment Rate (09/14/2017 Thursday 1:30 GMT)
On a seasonally adjusted basis, the unemployment rate in Australia fell to 5.6 percent in the month of July after the figure for the prior month was revised upward to 5.7 percent. The unemployment reading for July was in line with market estimates. While Australia added 27,900 jobs during the month, the number of unemployed people rose by 1,100. Forecast for August: addition of 19,600 jobs and an unemployment rate of 5.6 percent
#6: China Industrial Production (09/14/2017 Thursday 2:00 GMT)
In China, industrial production rose by 6.4 percent on a year-on-year basis in July after recording an increase of 7.6 percent in the previous month. Industrial production came in much below the market expectation of 7.2 percent. This is the weakest increase in industrial production since January this year. Manufacturing production rose at a slower pace and mining output declined further. On the other hand, electricity, water, and gas production increased from the previous month. Forecast for August: 6.6 percent
#7: Swiss National Bank Libor Rate (09/14/2017 Thursday 7:30 GMT)
The Swiss National Bank decided to hold its deposit interest rate at the record low of -0.75 percent during the meeting held on June 15, as analysts expected, in order to stabilize inflation and support growth. According to the policymakers, the Swiss franc continues to remain overvalued and a negative interest rate and forex interventions are aimed at reining the currency. The three-month Libor rate was also kept steady at -1.25 percent to -0.25 percent. Forecast for the next period: -0.75 percent
#8: Swiss National Bank Monetary Policy Assessment (09/14/2017 Thursday 7:30 GMT)
The Swiss National Bank releases the monetary policy assessment report on a quarterly basis. It is used as a tool by the Swiss National Bank’s governing board to communicate with investors as regards the monetary policy. It provides information on the outcome of the board members’ decision on interest rates and the economic conditions that influenced their decision. More importantly, it projects the country’s economic outlook and provides clues on the direction of interest rates in the future.
#9: Bank of England Official Bank Rate/MPC Official Bank Rate Votes (09/14/2017 Thursday 11:00 MT)
The Bank of England Monetary Policy Committee voted 6-0-2 for maintaining the Official Bank Rate at the record low of 0.25 percent during the meeting on August 3, as was widely expected. Policymakers said that the GDP growth is likely to be sluggish in the short term as the squeeze on the real incomes of households continues to weigh down consumption. Further, the Committee also decided the following:
– Maintain government bond purchases at £435 billion
– Maintain non-financial investment-grade corporate bond purchases at £10 billion
Additionally, the U.K.’s central bank cut the country’s growth forecast to 1.7 percent for the current year from the earlier estimate of 1.9 percent expansion. For the next year, the central bank predicts a growth of 1.6 percent compared to the previous estimate of 1.7 percent. Forecast for September meeting: 0.25 percent
#10: Bank of England Monetary Policy Summary (09/14/2017 Thursday 11:00 MT)
Released on a monthly basis, the monetary policy summary provides information on the outcome of the members’ vote on interest rate decision and about other policy measures. It also provides a commentary on the economic conditions that impacted the members’ votes. More importantly, it gives an idea of the country’s economic outlook and provides clues on the direction of future votes.
#11: U.S. CPI/Core CPI (09/14/2017 Thursday 12:30 MT)
In the U.S., the consumer prices rose by 1.7 percent on a year-on-year basis in July but missed market expectation for a 1.8 percent gain. In the previous month, the consumer prices increased by 1.6 percent. The increase in energy, medical care commodities, food, and transportation prices drove the CPI up in July. On a month-on-month basis, the consumer prices rose by 0.1 percent. The reading missed analysts’ expectation of a 0.2 percent gain. Core CPI, which excludes the volatile energy and food prices, increased by 1.7 percent in July on a year-on-year basis and by 0.1 percent on a month-on-month basis. Forecast for CPI and Core CPI on a monthly basis for August: increase of 0.3 percent and 0.2 percent
#12: U.S. Unemployment Claims (09/14/2017 Thursday 12:30 MT)
The number of American people filing for jobless benefits rose by 62,000 to 298,000 during the week that ended on September 2, which was well above analysts’ expectation of 241,000 claims. This is the highest reading since the week that ended on April 18, 2015, because of the impact of Hurricane Harvey. Meanwhile, the four-week moving average came in at 250,250 claims. This marked an increase of 13,500 claims from the prior week’s unrevised reading of 236,750 claims. Forecast for the next period: 300,000 claims
#13: U.S. Retail Sales/Core Retail Sales (09/15/2017 Friday 12:30 GMT)
In the U.S., retail sales increased by 0.6 percent on a month-over-month basis in July after the figure for the prior month was revised upward to an increase of 0.3 percent. The reading for July came in above analysts’ expectation for a 0.4 percent increase. This is the highest increase since December 2016 and the growth was mainly driven by higher sales at motor vehicle and parts dealers and miscellaneous store retailers.
Core retail sales, which exclude automobiles, food services, gasoline, and building materials, surged 0.6 percent after the figure for June was revised upward to a 0.1 percent increase. Earlier the commerce department had reported that the core retail sales, which represents the consumer spending component of the GDP more closely, had dipped by 0.1 percent in June.
Forecast for retail sales and core retail sales in August: increase by 0.1 percent and 0.5 percent, respectively