Economic calendar: Avalanche of crucial readings

Summary:

• UK economic growth expected to accelerate in Q2

• US CPI reading to confirm strong price growth

• Canadian unemployment rate forecasted to drop to 5.9%

• WASDE report may spur volatility on the grains market

The final trading day of the week may turn to be interesting as it is supported by the economic calendar flooded with important releases. The Swedish CPI reading scheduled for early morning will be followed by an avalanche of the UK data (including preliminary GDP reading for Q2). The inflation figures from the United States will be published in the early afternoon simultaneously to the Canadian labour market report therefore USDCAD may be a subject to increased volatility. Last but not least, commodity traders should keep on guard at 5:00 pm BST as WASDE report concerning the grains market will see the daylight.

8:30 am BST - Sweden, CPI inflation for July. The latest CPI inflation reading from Sweden saw pace of price growth picking up to 2.1% YoY and this time market consensus suggests we will see a deceleration to 2% YoY. However, Riksbank pays biggers attention to CPIF (CPI at constant interest rates) inflation as this measure is used to determine price stability target in Sweden. Therefore SEK traders may find it pleasing that CPIF reading is expected to show this measure reinforce at 2.2% YoY (target set at 2%). Nevertheless, interest rate derivatives market shows just a 10% probability of a rate hike this year.

9:30 am BST - UK, GDP for Q2. The UK economy disappointed in the first quarter of the year by showing just 1.2% YoY growth rate (0.2% QoQ). However, according to the economists surveyed by Bloomberg the second quarter should be better as they expect the UK economic growth to accelerate to 1.3% YoY. Not much but still better than the first quarter. On the quarterly basis the growth rate should equal to 0.4%. Apart from the GDP report, GBP traders will be offered construction output as well as manufacturing and industrial production numbers.

1:30 pm BST - US, CPI inflation for July. Yesterday’s PPI reading disappointed by showing neither advance nor decline in July on the monthly basis. The YoY print also came in lower-than-expected. However, this of course does not need to translate into weaker CPI reading today. The median estimate provided by Bloomberg agency suggests we will see the headline measure remain at 2.9% YoY while the core one should stay intact at 2.3% YoY. Given the will of the US monetary authorities to continue with gradual rate hike path such a reading could only confirm them that it is a right thing to do.

1:30 pm BST - Canada, Labour market report. Exactly one week after the release of the US NFP report Canadian traders will be offered counterpart from their country. The Canadian economy is said to add 17k jobs in July. Moreover, the unemployment rate is expected to move lower from 6% to 5.9% while the participation rate should decline from 65.5% to 65.4%. The wage growth is expected to accelerate to 3.6% YoY from 3.5% YOY previously. If the labour market continues to tighten the odds for BoC rising rates in the final quarter of 2018 could increase (currently at 76.5% for hike in October).

Today’s dataset from the UK and the US may allow GBPUSD to break below the support level at 1.2790. If this is so the outlook for the UK currency may deteriorate even further. Next support can be found around 1.26 handle. Source: xStation5