The main highlight of next week will be the Scottish referendum. Markets will focus on the outcome of the vote for independence on September 18th. Polls in the last two days have shown that supporters of staying in the Union have managed to gain a lead ahead of the “Yes” campaign that is pro-independence.
A YouGov poll for The Times and Sun newspapers showed today that the “NO” campaign has regained a 4-point lead over the separatists. According to the survey, 48% were for independence from the United Kingdom, which was behind the 52% who supported keeping Scotland in the Union. The poll excluded those who said they did not know how they would vote.
Apart from the referendum, focus will remain on the UK next week for important economic data releases. These include updates on inflation (on Tuesday) and the data on employment (on Wednesday) as well as minutes from the latest Bank of England meeting, also on Wednesday. Recent UK jobs data have been mixed – showing a decline in the unemployment rate to 6.4% in the second quarter, the lowest since late 2008 and down from 6.5% in May but pay growth was slowing. However the Bank of England expects wage growth to rise before making its first rate hike.
The Bank of England kept rates on hold at 0.5% at its meeting last week and the minutes next week will be closely watched to see how the central bank’s MPC members voted. The previous meeting revealed two members had voted for a quarter point rate rise in the benchmark rate.
Other major central banks will be in focus next week, mainly the Federal Reserve and the Reserve Bank of Australia.
On Wednesday all eyes will be on the Fed’s FOMC announcement of its latest monetary policy decision. The Fed is currently expected to announce its decision to end stimulus in October, and will reduce its bond-buying by another $10 billion at this meeting. Expectations are for the fed to start raising rates in mid-2015. Close attention will be paid to Fed Chair Yellen’s speech for any more insight into the timing of the first rate hike. A dovish-sounding Yellen would be negative for the greenback.
Other data from the United States include industrial production (on Monday) and inflation (on Wednesday).
From the Eurozone, data releases also include inflation data, due on Wednesday. This figure will be the final version. A preliminary CPI figure for August was released two weeks ago showing inflation in the euro-area dropped to a fresh five-year low of 0.3%. The low inflation rate is a major concern for the European Central Bank which cut interest rates at its latest policy meeting early this month.
Another central bank that will draw market attention will be the Reserve Bank of Australia which releases its monetary policy meeting minutes on Tuesday. The RBA held rates at a record low 2.5% at its meeting last week.