Next week will most probably be quieter after this week’s key events such as the ECB meeting and the US employment report. The pound will see the UK employment report as well as the Bank of England report on inflation, while in the Eurozone investors will catch a glimpse of the flash estimate of its growth rate for the third quarter. Important data will also come out of China such as inflation, industrial output and retail sales.
Starting with the pound, which has been under pressure lately due to disappointing PMI numbers, Wednesday will be an absolutely key day. First of all, the UK employment numbers will be released, expected to show unemployment dipping below 6% to 5.9% while the claimant count of registered unemployed is forecast to drop by 22 thousand. Following the data, the Bank of England will release its quarterly Inflation Report – an important tool that shows what the Bank itself thinks about its chances of achieving its 2% inflation target. The presentation of the report will be accompanied by the Governor’s quarterly press conference and since Carney hosts a press conference about monetary policy and the economy only four times a year, it will be very closely followed. Particularly interesting will be whether Carney updates any estimate of when the Bank sees it appropriate to raise interest rates.
Moving on to the euro, the most important day of the week for the single currency will be Friday. The day will see the release of the flash GDP estimate for the third quarter. The quarterly growth rate is expected to come in at a meagre 0.1%, so there is a risk of a negative surprise in terms of stagnation or a slight contraction. The different country-members will also be looked at and the figures will probably serve as a reminder of the problems facing the Eurozone. On Friday, final inflation numbers for October will also come out, expected to confirm the preliminary estimate of 0% price growth month-on-month and 0.4% year-on-year. On Wednesday, the Eurozone’s industrial production numbers for September will be released.
Concerning the dollar, the week will be relatively quiet. The key data points which will attract attention will of course be the weekly jobless claims on Thursday and Friday’s retail sales numbers – expected to show a rebound in October from September’s negative performance. Friday will also see the release of the University of Michigan consumer sentiment preliminary number. There are also some Fed speakers during the week, but none of them belong to the Yellen-Fisher-Dudley triad that the market likes to follow more closely.
Other statistics that will come out of Asia include the Japanese current account and machinery orders on Tuesday and Thursday respectively, as well as Chinese inflation on Monday and retail sales and industrial output on Thursday. A speech by the Reserve Bank of New Zealand Governor Chris Wheeler following the publication of the Bank’s Financial Stability report early on Wednesday, will be followed by kiwi traders.