Next week will be relatively quiet in terms of data, after the release of key numbers in the past week such as US nonfarm payrolls and Eurozone inflation and unemployment. However, central bank meetings in Japan, the UK and Australia as well as minutes from the Federal Reserve’s latest meeting should shed some light on policymakers’ views. At the end of next week, the annual IMF / World Bank meetings take place in Washington and the bringing together of so many finance ministry and central bank officials from around the world could result in some interesting statements.
The start of the week could be a slow one as China will enjoy its Golden Week holiday until Tuesday October 7 (inclusive), while Australia will be on bank holiday on Monday. Apart from a couple of retail business confidence and investor sentiment surveys out of the Eurozone, Monday is expected to be quiet.
Things will pick up on Tuesday as central bank meetings conclude in Australia and Japan. In Japan, the Governor’s press conference will be key for insights into how the BoJ views the latest economic developments in the country as well as the rapid decline recently of the Japanese yen. Recent data has cast doubt on the Japanese economy’s ability to successfully overcome the ‘speed bump’ of the April sales tax increase, although the latest round of yen weakness could give a boost to the country’s exporters. No change in policy is expected, either in Australia or in Japan, but the comments of the respective central bank heads will be closely scrutinized. With respect to Australia, new employment numbers will be released on Thursday and it will be interesting to see how they compare to the previous set of expectations-busting figures.
Moving on to Wednesday, the Federal Reserve minutes of its latest September 16-17 minutes will be released. The minutes should be more interesting than usual as there were two dissenters in that meeting (Richard Fisher and Charles Plosser; as opposed to just Plosser previously) and there was probably a lively discussion involving other members too on how the Fed should gradually tighten policy. The pace of future monetary policy tightening in the United States is one of the most important issues for financial markets including the dollar, US bonds and stocks and emerging markets. Therefore any update on the state of the discussion within the Fed could be a potential market mover.
Following the Fed minutes, Thursday will see the Bank of England decision (no change is expected) as well as a speech by ECB President Mario Draghi. Following these events, the IMF / World Bank meetings in Washington will take center stage on Friday and over the weekend. IMF chief Christine Lagarde may have set the tone for those meetings in a speech yesterday by talking about a mediocre and disappointing global economic recovery, which is “brittle, uneven, and beset by risks.”