Currencies wobbled in a week that saw a failed EU Summit on Brexit and mixed economic data from the US. What’s next? A first look at Q3 GDP in the US, and rate hikes from the ECB and the BOC stand out. Here the highlights for the next week.
US retail sales disappointed with an unexpected drop while JOLTs job openings showed another record high. The upbeat FOMC Meeting minutes kept the greenback bid against its peers but it never went too far. No breakthrough was reached in the EU Summit on Brexit and the clock is ticking. This put pressure on the pound and also a bit on the euro.
Updates:
Canadian rate decision: Wednesday 14:00, press conference at 15:15. The Bank of Canada is set to raise interest rates from 1.50% to 1.75%. The Ottawa-based institution provided thick hints about the move in recent public appearances by officials and the recent BOC Business Outlook Survey was upbeat. Moreover, the positive conclusion of the new trade deal lifts a significant cloud of uncertainty from the Canadian economy. This October rate decision also consists of new forecasts and a press conference by BOC Governor Stephen Poloz and Deputy Carolyn Wilkins. Markets will pay close attention to their words as well. The BOC has been relatively upbeat in previous decisions.
Euro-zone rate decision: Thursday, 11:45, press conference at 12:30. The European Central Bank reduced the pace of its bond-buying scheme this month, and now purchases only 15 billion euros every month, en route to ending the program by the end of the year. However, there are some signs of a slowdown and core inflation dropped below 1% once again. The Bank is unlikely to make any policy announcements at this meeting, which does not consist of new forecasts. However, markets will scrutinize every word that comes out of President Mario Draghi’s mouth. In the previous meeting, Draghi was relatively upbeat. He may change his tone now.
US Durable goods orders: Thursday, 12:30. Orders of durable goods represent investment and feed into GDP. This publication for September will shape expectations for GDP published on the following day. Orders of durable goods jumped up 4.4% in August according to the final figures. However, the figure is quite volatile. Core orders, which are more important, remained flat back then. The report for September is projected to show a drop of 1.1% in headline orders while core orders are projected to move up by 0.3%.
US GDP: Friday, 12:30. The US economy grew by an annualized pace of no less than 4.2% in the second quarter of the year, according to the final figure. We will now get the first estimate for Q3, which is projected to be somewhat weaker but still above the “new normal” levels of 2-2.5%. An increase of 3.3% annualized is expected. The first publication tends to have the most robust impact.
