Central bank policy meeting minutes from the US and the UK as well as PMI data out of the Eurozone will probably concentrate the minds of market participants, together with some inflation data again from the US and the UK.
Amid all the economic data and events scheduled for the following week, political events out of Japan will probably prove a major focus of attention – as was the case this week. The reports that the sales tax hike is going to be delayed and that early elections are going to be called, will most probably be either confirmed or denied next week. According to some unconfirmed reports, for the sales tax hike to be delayed, 3rd quarter GDP data due out on Monday should be worse-than-expected. Whether the Japanese Prime Minister will act like a trader and act depending on whether the GDP numbers are better or worse than expected is a little far-fetched, but some clarity on the elections / sales tax issue should come about. In particular, Prime Minister Abe will return from a journey on Monday and a decision should be taken shortly thereafter.
Following sterling’s weak performance after Mark Carney’s press conference and the inflation report, Wednesday sees the release of Monetary Policy Committee votes and minutes. While the views of Carney and of the Bank’s research department are known after Wednesday, it will be interesting to see the range of views within the Bank’s policy board. UK inflation for October on Tuesday will also be watched for signs if inflation is falling towards the 1% level and below, which will force Carney to write a letter to the Chancellor explaining the deviation from target.
For the euro, the key day is going to be Thursday, when the flash PMIs will be released. The release of third quarter GDP growth figures today showed a mild beat in expectations, which should be encouraging for those worried about a possible recession in the Eurozone. October’s PMI numbers were to the encouraging side and some positive numbers for November could mean that the Eurozone economy will stay out of trouble during the final quarter of the year as well.
Finally, for the US dollar, the key days are going to be Wednesday and Thursday. Wednesday sees the release of the Federal Reserve minutes and the discussion in the Board of Governors could reveal some hints about the Fed’s strategy after the end of QE. Different arguments were probably made – as well as some talk about when it would be appropriate to perhaps reinstate QE if there is some kind of economic turbulence. Thursday will see the release of US inflation numbers and it will be interesting to watch for the negative impact of energy prices on the overall price level.