September is a busy month. For investors, asset price movements will be determined by central bank rate decisions, employment reports and elections. There are no monetary policy announcements this week but inflation and spending reports from the U.S. and U.K. will shape expectations for next week’s Federal Reserve and Bank of England meetings.
The Fed has long believed that high inflation is transitory but the longer CPI remains elevated, the less confident central bankers and investors will be about price pressures easing meaningfully. The retail sales report on Thursday will also be important following last week’s surprisingly soft non-farm payrolls number. If spending falls for the second month in a row, the third time in four, investors will push their expectations for a taper announcement to November from September —that talk is already growing.
Labor market numbers are due from the U.K. on Tuesday followed by inflation numbers on Wednesday and retail sales on Friday. According to PMIs, services and manufacturing enjoyed strong job growth in August and reported higher prices. Stronger data should not only translate into Bank of England optimism but could also encourage the central bank to step up taper plans. A recent Reuters poll found economists looking for a sooner than expected rate hike from the BoE. With COVID-19 restrictions eliminated in most of the U.K., the economy is expected to grow by 2.5% this quarter and 1.5% next.
Aside from these reports, Canada’s inflation, Australian employment and New Zealand GDP will be important numbers to watch. All three of the commodity currencies— CAD , AUD and NZD —traded higher on Monday. The COVID-19 situation down under remains grim. Australia’s most populous state, Queensland, which includes Sydney could go into another lockdown following a new cluster of cases. This weekend, new daily infections hit fresh record highs. Much of the country has been under stay at home orders for the past 2 months and the economic consequences of these restrictions will appear in the data like this week’s jobs report which is expected to show major job losses.
New Zealand’s Prime Minister extended Auckland’s lockdown to September 21st to prevent new cases emerging. While second quarter GDP numbers should be good, the manufacturing PMI index which is a more timely measure of New Zealand economic activity should be weaker. The Canadian dollar traded higher on the back of oil , which closed above $70 for the first time since September 3rd. Friday’s labor market report was strong as well, but inflation data this week could be soft.
The top 10 events to watch this week in the FX market are the following:
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.
Analysis few and far between recently and are lossing depth.Like 0