The Top Events/Releases for next week - page 3
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What will the market be focused on next week
Forex Weekly Outlook September 26-30
After holding off on a rate hike last week, the Fed is keeping itself in the market's sights, with Fed Chair Janet Yellen testifying before the House Financial Services Committee on regulation and supervision Wednesday at 10:00AM ET (14:00GMT).
On Thursday, Yellen is due to speak via videoconference at the Minority Bankers Forum in Kansas City at 4:00PM ET (20:00GMT).
Her comments will be monitored closely for any new insight on policy. Last week, the U.S. central bank kept interest rates unchanged but hinted that an increase could come in December if the job market continued to improve.
2. ECB President Draghi Delivers Comments
ECB President Mario Draghi is due to testify before the European Parliament's Committee on Economic and Monetary Affairs in Brussels on Monday at 15:05GMT (11:05AM ET).
On Wednesday, Draghi is scheduled to speak about current developments in the euro area at the German Bundestag, in Berlin at 14:30GMT (10:30AM ET).
Investors will be looking for indications that the ECB is moving towards boosting monetary stimulus at its December meeting.
3. BOJ Governor Kuroda Remarks in Focus
BOJ Governor Haruhiko Kuroda is due to speak at the National Securities Industry Convention in Tokyo on Thursday at 6:35GMT (2:35AM ET).
His comments take on extra importance after the Japanese central bank announced that it will shift policy to targeting interest rates on Japanese government bonds as the focus of its massive stimulus program, abandoning its target of increasing base money.
4. OPEC Meeting
OPEC members, led by Saudi Arabia and other big Middle East crude exporters, such as Iran and Iraq, will meet non-OPEC producer Russia at informal talks on the sidelines of an energy conference in Algeria from Monday through Wednesday.
According to market experts, chances that the meeting would yield any action to reduce the global glut appeared minimal. Instead, most believe that oil producers will continue to monitor the market and possibly postpone freeze talks to the official OPEC meeting in Vienna on November 30.
An attempt to jointly freeze production levels earlier this year failed after Saudi Arabia backed out over Iran's refusal to take part of the initiative, underscoring the difficulty for political rivals to forge consensus.
5. U.S. Presidential Debate
With just over six weeks until Election Day in the U.S., the market will turn its attention to the first televised U.S. presidential debate Monday night.
Market participants are mostly expecting Democratic candidate Hillary Clinton to win the presidency and have not factored in the implications of a victory for Donald Trump. The idea of Trump in the White House is a worrying one for some investors who balk at his populist, unpredictable style.
Recent polls have shown a tightening race, with Clinton's once-comfortable lead narrowing sharply. The latest NBC/ Wall Street Journal poll gives Clinton a 6 point lead, 43% to Trump's 37%, among likely voters.
Top events and releases from October 3 to October 9th
Top 5 Economic Calendar Events for October 3-7
1. US Employment Report
The US employment report for September will be released on Friday October 7th at 08.30 EST.
Last month’s employment report was generally weaker than expected with a headline increase in non-farm payrolls of 151,000 while unemployment held at 4.9%, and the increase in earnings was below expectations at 0.1%.
This month’s data has less immediate importance for expectations surrounding Federal Reserve policy, given the assumption that it will be very difficult to raise rates at the November FOMC meeting, although this is the final employment report before that meeting.
A relatively subdued report would certainly maintain expectations that the Fed will be on hold until December.
There would, however, be a much greater element of doubt if the data proves to extremely strong and there would be potentially very important implications for the bond market.
Revisions to last month’s data will be important, especially as August data is often initially reported as weak, only to be revised higher in subsequent months.
The unemployment and participation rates will be watched closely within the data given that the economy is close to full employment. In this context, increasing divisions within the Fed will be a very important factor moving forward and details within the report will be crucial.
The average earnings data will also be very important for expectations surrounding inflation and will continue to be a key metric for the Federal Reserve. Indeed, the average earnings data could well be the most important element in the report.
There was speculation that an early cut-off date for last month’s report undermined the earnings data and there could be a catch-up effect in the latest report. A strong increase in wages growth would certainly cause the FOMC hawks to become increasingly agitated.
The ADP employment report will be released on Wednesday September 5th at 08.15 EST and will also have a significant impact ahead of the payrolls data.
2. US ISM Manufacturing Survey
The latest US ISM manufacturing report will be released on Monday October 3rd at 10.00 EST.
The ISM manufacturing survey for last month was much weaker than expected with a retreat back into contraction at 49.4 from 52.6 the previous month.
This report will be watched very closely given a suspicion that faulty seasonal adjustment could have been an element in weakening last month’s data.
This month’s release will, therefore, be important and there were no clear leads from the regional survey, although there has been tentative evidence of a net improvement.
Another reading below the 50 level would be another significant setback for confidence while a move back into expansion would be a relief.
The non-manufacturing report on Wednesday will be equally important given the big miss reported last month. A notable improvement will be needed to boost confidence.
3. Reserve Bank of Australia Rate Decision
The Reserve Bank of Australia (RBA) rate decision is on Tuesday October 4th local time (23.30 EST Monday).
Although markets are not expecting a change in interest rates, this will be an important meeting as it is the first under new Governor Lowe following the retirement of Governor Stevens at the previous meeting.
There should not be a major dislocation of policy given that Lowe was the deputy Governor and the underlying theme should be relative continuity.
There will, however, be a close focus on the statement for any shift in emphasis under the new governor with a particular focus on the exchange rate and financial stability.
There has been a slight shift in the RBA policy framework with a target inflation rate of 2-3% over time rather than on average over the cycle. There is also a greater focus on financial stability, which may lead to a greater weight being given to housing-sector risks.
This combination of factors suggest a slightly more hawkish policy stance is likely.
Any commentary on the international outlook will also be important.
4. UK PMI Manufacturing Survey
The UK PMI manufacturing survey will be released on Monday October 3rd at 08.30 EST.
There was a sharp recovery in the manufacturing sector data last month as manufacturing returned to growth after the sharp decline seen immediately after the UK referendum.
Markets will want to see if momentum has been sustained in the latest survey or whether there is evidence of a relapse in the latest data.
This will be particularly important as it will tend to shape expectations surrounding the November Bank of England inflation report and rate decision. The October data will be released immediately ahead of the November rate decision and the inflation report will already have been drafted by then.
A disappointing survey for this month would significantly increase the potential for a further cut in interest rates at the November meeting.
The construction and services data will be released over the following two days with the services-sector data particularly important for overall sentiment.
5. Canada Employment Report
The Canadian employment report will be released on Friday October 7th at 08.30 EST.
The immediate headline impact will tend to be lessened slightly by the fact that the data comes out at the same time as the crucial US employment report, but it will still be a very important release for the monetary policy outlook and the Canadian dollar.
The latest inflation data was weaker than expected and the retail sales release was also below expectations, with the Bank of Canada Governor taking a more downbeat stance in his latest commentary. These concerns were offset partially by a stronger than expected GDP report this Friday.
If the employment report is also noticeably weaker than expected, alarm bells over the Canadian outlook will ring louder and there will be the potential for additional speculation over a further easing of monetary policy.
In contrast, a robust report in terms of headline growth and underlying components would offer some underlying reassurance and dampen talk of further easing.
source
1. US Federal Reserve Minutes
Minutes from the September FOMC meeting will be released on Wednesday October 12th at 14:00 EST.
At the September FOMC meeting, interest rates were left on hold, but there were three dissenters who called for an increase in rates, the first time there had been three dissenters for five years.
There was clearly an increase in underlying divisions within the committee at the meeting with the hawkish members increasingly frustrated at the failure to raise rates.
There is an assumption that the Fed will look to raise rates in December and markets will be looking for validation of this view with the September jobs data supportive of a rate move at the December meeting.
There has been an assumption that a rate increase will not be considered at the November meeting given political constraints. The commentary will be watched very closely to assess whether the Fed makes any commentary on the November meeting and the possibility that rates could be increased. The Fed will want to keep its options open to maintain the impression of political neutrality, although it will still be very surprising if a hike is sanctioned.
Markets will also be looking for any guidance on the potential triggers, which will lead to a rate increase.
Given internal divisions, the most likely outcome is that there will be a strong commitment to raising rates before year-end.
2. US Retail Sales
The latest US retail sales report will be released on Friday October 14th at 08:30 EST.
The last two retail sales reports have been relatively weak with some evidence that sale stalled after a notably strong quarter.
The Federal Reserve remains generally confident in the outlook, but with some concerns that momentum will slow and the latest data will be watched closely.
Another disappointing reading would trigger more sustained doubts surrounding the outlook, while a robust reading would engender greater confidence in the outlook, bolstering the case for Fed tightening. The reported auto sales data was strong for the month and a key issue will be whether this strength was complemented by strong demand elsewhere or whether the auto strength diverted spending from other retail sectors.
The University of Michigan consumer confidence data will be released later on the same day.
3. China Trade Data
The latest Chinese trade data will be released on Thursday local time (around 22:00 EST) Wednesday.
Chinese markets have been closed for the past week due to national holidays. The re-opening of markets will tend to put a fresh focus on the Chinese outlook.
There was a fresh decline in currency reserves for September at the fastest pace for four months and the latest trade data will be an important indicator of both domestic and international trends.
There was a further tentative evidence of a recovery in the August data with both exports and imports recording annual growth in yuan terms.
Another improvement in the September data would boost confidence in the short-term Chinese trade outlook and also boost confidence in global growth. There will be some concerns that the collapse of the Hanjin shipping group could have dislocated trade volumes to some extent.
Any fresh downturn in activity would raise fresh concerns surrounding the Chinese growth outlook and undermine global risk conditions.
The latest Chinese consumer inflation data will be released on Friday October 14th.
4. OPEC Meetings
OPEC officials are due to meet during the week in Istanbul.
Following last week’s agreement to curt crude production, there will be a series of OPEC meetings over the next few weeks with the first round of discussions due to be held during the forthcoming week in Istanbul.
Amid conflicting reports, an important focus will be on any talks with Iran with a suggestion on Friday that the Iranian oil minister will not attend the talks. Rhetoric from Saudi officials will be an important focus during the week.
Discussions with leading non-OPEC producer Russia will also be an important focus even though Russian officials have described the talks as consultative only. Crude prices will be vulnerable if there is any evidence of backtracking on the agreement.
5. IMF Meetings
The IMF meetings will continue on October 7-9th in Washington.
The set-piece events at the IMF weekend autumn meetings will be watched closely and could have a significant impact, although the informal meetings, press briefings and general rumours may have a more important overall impact.
Markets will be looking for any fresh hints on monetary policy by Federal Reserve officials. The remarks from ECB policy-makers will also be under close scrutiny with any further comments from Bank of England Governor Carney also a significant focus.
A persistent theme over the past few weeks has been the calls from central banks for the burden on monetary policy to be eased. Most prominently, ECB President Draghi has consistently called for greater government action to support the Eurozone economy.
Central banks do not operate in a vacuum and relationships with governments are extremely important especially where governments have the power to intervene in bank mandates.
A concerted stance towards more active fiscal policies and a reduced role for ultra-loose monetary policies would have very important underlying implications for markets.
source
1. ECB Governing Council Meeting
The ECB will announce its latest policy decision on Thursday October 20th at 07.45 EST. Bank President Draghi will hold his regular press conference 45 minutes later. This will be an important meeting for the ECB, especially as there is only one further meeting in 2016.
There will be an important focus on the bond-purchase programme, which is currently due to come to an end in March 2017, although the ECB has stated that it will be extended if necessary.
Since the previous meeting, there have been reports that the ECB is close to a consensus on the need to taper bond purchases before the programme comes to an end. There have also been reports that the bank could consider a temporary relaxation of rules, allowing some bonds to be bought with yields below the -0.40% deposit rate, and potentially amending the capital key.
If the ECB is considering a further extension of the bond-buying programme, it will be dangerous to delay an announcement beyond December and the bank will need to prepare action at this meeting.
Overall, it will be very difficult for Draghi to repeat his stance of last month and effectively say nothing. If Draghi refuses to make significant comments, market speculation will be rife and Draghi would risk triggering a market assumption that the bond-buying programme will not be extended.
Even if no actual policy changes are agreed, Draghi will have to give some form of guidance.
2. US Consumer Prices
The latest US CPI report will be released on Tuesday October 18th at 08.30 EST.
The most likely outcome is that the Federal Reserve will raise interest rates in December and will look to maintain a very slow pace of tightening.
There is, however, an increasing risk that the bond markets will voice their discontent if there is evidence of a significant increase in inflation. 10-yields are already at four-month highs and the mood surrounding bonds remains much more cautious. The latest inflation data will, therefore, be very important in assessing underlying trends within the economy and the bond-market reaction will be crucial.
Headline consumer prices fell 0.2% in the October 2015 release and there is, therefore, a strong probability that there will be a significant upward move in the headline annual inflation rate for this month.
The core rate will also be important in assessing whether inflation pressures are starting to extend beyond the medical sector.
3. Bank of Canada Interest Rate Decision
The latest Bank of Canada policy decision will be announced on Wednesday October 19th at 10.00 EST.
The Bank Governor will hold a press conference 45 minutes after the release.
This is an important meeting, especially as it contains the monetary policy report and a press conference, which are held every other meeting.
There has been mixed economic data since the previous policy meeting with a strong employment report and gains in housing starts, but weaker than expected readings for inflation and retail sales.
In the previous report, the central bank stated that there was evidence that inflation risks had tilted slightly to the downside.
The comments on inflation trends will inevitably be extremely important within the statement to see if there is any follow-through on downside risks and any explicit move to an easing bias.
Comments on financial stability will also be very important in the report with the bank still very concerned over house-price increases and risks to financial stability from excessive household borrowing.
4. UK Consumer Inflation
The latest UK CPI inflation data will be released on Tuesday October 18th at 04.30 EST.
Following the slide in Sterling over the past few weeks, the inflation data will be watched very closely in the short term for evidence on the impact on inflation rates.
If inflation starts to increase rapidly, it will be much more difficult for the Bank of England to cut interest rates further, even allowing for the fact that the bank is prepared to let inflation overshoot the target to some extent. There would also be an important risk that UK gilt yields would rise further if inflation rises sharply.
Sterling weakness will take some time to feed through into the inflation rate, although there are already some pressures in the form of higher fuel prices. There will not have been any impact from the most recent decline in Sterling given that the cut-off for the data was well before the latest currency slide and the data may, therefore, prove to be relatively subdued in this release.
The PPI data will also be important for evidence on inflationary pressures further down the production chain. The latest average earnings data will be released on October 19th and retail sales data on Thursday October 20th.
5. EU Summit
The European Council will meet on Thursday 20th and Friday 21st October in Brussels.
The EU Summit in Brussels will be an important event with the on-going issue of Brexit the dominant focus.
At the meeting in Bratislava last month, the UK was excluded, but UK Prime Minister May will be attending this Summit.
Other EU members, in particular, will not want to engage in any specific negotiations surrounding the terms of Brexit, but the overall tone of the talks will be important for overall market sentiment surrounding the UK economy and Sterling. There will inevitably be expectations of further tough talking with fears over a hard Brexit having a very negative impact on Sterling during the past two weeks.
Any sign of reconciliation and a more measured tone would potentially trigger some rebound in the UK currency given very downbeat expectations.
Week Ahead: Commodity FX To Face Headwinds As Oil Topping Out
Sentiment was unstable for most of the week and this was well reflected in rising cross market volatility. Intact uncertainty, related to the European banking sector, more muted growth expectations when it comes to China and the intensifying notion that the Fed will tighten monetary policy in December have been driving the latest developments. Elsewhere, fears over the likelihood that the UK may be heading for a hard Brexit continue, irrespective of UK PM Theresa May being ready to let parliament debate her Brexit plans.
In an environment, in which global growth expectations fail to rise in order to compensate for falling liquidity expectations, caution should be warranted still when it comes to risk assets.
Next week’s ECB announcement is unlikely to change the outlook as such, especially as the central bank is no closer to considering a more aggressive stance, as already indicated by central bank President Draghi.
It must be noted too, that OPEC related expectations, when it comes to the announcement of an output freeze in November, are unlikely to rise further. This coupled with a stronger greenback may put an end to the last few weeks’ uptrend in oil prices, at least in the short-term. Should the above outlined conditions prove correct, further downside risks in commodity currencies such as the NOK towards the end of the year cannot be excluded This is particularly true as there is only limited room of further stabilising rate expectations.
The same holds true when it comes to the CAD. Next week’s BoC rate announcement is likely to confirm that growth and inflation remain subject to downside risks, and such prospects will keep rate expectations capped.
When it comes to GBP it cannot be excluded that the currency faces a period of stabilisation after having sold off towards multi-decade lows. Nevertheless, even if next week’s inflation, labour and retail sales data surprise higher, such an outcome is unlikely to prove a sustainable market driver, especially as the BoE links its dovish stance to long-term uncertainty.
In the US, the third Presidential debate is unlikely a game changer while September CPI is not expected to derail the December rate hike expectations. We believe that the rate outlook continues to put a floor below the greenback.
Asia eco data this week - NZ CPI, Aust RBA & jobs report, China GDP