Economic calendar: Was inflation save euro?

Summary:

• Swedish retail sales expected to rebound after last month’s unexpected drop

• European inflation forecasted to see a minor pick-up

• US PCE inflation to be released in the afternoon

On the final trading day of the week investors will be offered a couple of interesting readings. The attention will be stolen by the inflation data from the euro area after ECB members expressed confidence in the price growth acceleration. Apart from that, traders will focus on data from Sweden, Canada and the United States. Let us mention that the UK GDP reading for the second quarter will be released today at 9:30 am BST but it is a revision therefore no major moves are expected.

8:30 am BST - Sweden, Retail Sales for August. Latest weaker inflation and GDP reading from the Swedish economy suggest that we may have to wait some time before we see Riksbank raising interest rates. However, it should be noted that despite deceleration of inflation it still remains at decent levels. Latest retail sales reading showed an unexpected drop of 1.2% YoY. Notice that it was the first negative reading since late-2011. However, market consensus suggests that we will see rebound in August as the reading is expected to show 0.5% YoY advance.

10:00 am BST - CPI Inflation from euro area. The latest confidence of the European central bankers in the incoming pick-up in price growth raised questions whether we will see a rate hike before the end of Draghi’s tenure. Yesterday’s German reading came in better-than-expect what bodes well for the whole bloc’s print. Economists point for a pick-up to 2.1% YoY when it comes to headline and to 1.1% YoY for the core gauge. French and Spanish figures released earlier may help investors assess what the EMU reading can show.

1:30 pm BST - Canada, GDP for July. Federal Reserve raised interest rates this week and now the question remains whether Bank of Canada will follow into its footsteps during meeting in October or not. Money market and previous behaviour of the Canadian central bank suggests that it is a done deal but, as always, much will depend on data. Today’s monthly GDP reading may give a hint of the overall condition of the economy. Market consensus suggests that the Canadian economy expanded at the pace of 0.1% MoM in July and 2.2% YoY.

1:30 pm BST - US, PCE inflation for August. While attention is usually paid to the CPI inflation as it comes out earlier investors should also follow release of the PCE data. Why? Because it is this measure that Fed uses to set its inflation target. Headline reading is expected to see a minor drop from 2.3% YoY to 2.2% YoY while the core gauge is expected to reinforce at 2% YoY.

Central bank speakers scheduled for today:

• 9:35 am BST - Norges Bank Deputy Governor Nicolaisen

• 12:40 pm BST - ECB’s Lane

• 1:30 pm BST - Fed’s Barkin

• 1:35 pm BST - ECB’s Praet

• 2:20 pm BST - BoE’s Ramsden

• 9:45 pm BST - Fed’s Williams

EURUSD continues its post-Fed drop fuelled additionally by the bigger than previously assumed deficit on the Italian budget. Inflation data from EMU may help euro regain ground but a beat would be needed. Source: xStation5