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The Economic Week Ahead

Market Analysis
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Main Macro Events This Week

United States: Several major events are on the horizon, including monetary policy decisions from the FOMC, BoJ, and BoE, not to mention the U.S. presidential election, now less than three weeks away. Uncertainties over monetary policy, the political landscape, as well as the economic and inflation outlooks have largely restrained global markets in recent weeks. However, stocks and bonds have been buoyed of late by expectations that central banks will maintain their uber-stimulative policies, signs that 2H growth is accelerating, albeit modestly, and that inflationary pressures might be surfacing.

Data takes a backseat this week with a number of Tier one reports, but none that are crucial for near term direction or for the FOMC decision next week. The Advance GDP report for Q3 headlines (Friday). Employment costs for Q3 are also due (Friday) Both of these reports are old news, however, and should have little impact. Also October ISM (Monday) and services (Wednesday) numbers and  October consumer confidence (Tuesday). The final October consumer sentiment data from the University of Michigan survey (Friday), New home sales for September (Wednesday) also August home price reports (Tuesday) from Case-Shiller and the FHFA, along with the September pending home sales index. Durable orders for September (Thursday), finally of note is the advance trade report for September due (Wednesday). Fedspeak: starts to lighten up ahead of the November 1, 2 FOMC. This week there is the usual mix of hawks and doves; Monday sees – Dudley (dove), Bullard (turning hawkish) , Evans (Dove) and Powell (centrist). Lockhart (hawkish) speaks Tuesday.     

The Q3 earnings announcements peak this week with about 1/3 of the Dow and 1/3 of the S&P reporting, including the two biggest stars Apple (Tuesday) and Alphabet (Thursday). Through the earnings season so far, 7 of the 11 S&P sectors have recorded profit growth, while earnings have beaten expectations by nearly 7%.

Canada: The final piece of the August GDP is released Monday along with the Bank of Canada Governor Poloz and Senior Deputy Governor Wilkins appearing at the House of Commons Standing Committee on Finance.

Europe: With the ECB’s decision on the future of the QE program postponed until December, the focus returns to data releases and this will be a busy week. The most important numbers currently are business confidence indicators, manufacturing PMI (Monday). The German Ifo Business Climate (Tuesday) French Business Confidence (Tuesday) are all expected to rise slightly which should leave the European Commission’s overall ESI Economic Confidence (Friday) little changed at 105. All those are pretty much in line with the ECB’s central scenario of a gradual recovery with ongoing risks to the downside. GDP numbers are also due this week, along wityh HCIP numbers.

UK: The focus remains on the Brexit process, not least of which is the constitutional crisis that the referendum has instigated. The UK’s calendar this week features the CBI surveys on industrial trends (Monday) and distributive trades (Thursday), along with the first estimate of Q3 GDP (Wednesday). Given Brexit uncertainties, sterling markets will likely be more sensitive to any unexpected weakness in data rather than any unexpected strength.

China: No data releases this week.

Japan: September services PPI (Wednesday), CPI , September Unemployment , Personal Income and PCE all due this week. Already released are Trade balance and PMI manufacturing which ticked up to 51.7 from 50.4 last time.

Australia: The calendar will provide a comprehensive picture of the Q3 inflation backdrop, with CPI (Wednesday), PPI (Friday) and trade prices (Thursday) due this week.

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Stuart Cowell

Market Analyst

HotForex

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