Summary:
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German inflation expected to accelerate in August
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Canadian GDP report to be released in the early afternoon
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US PCE inflation forecasted to reinforce above Fed’s target
Yesterday’s calendar was rather empty but Thursday offers more interesting readings. Throughout the day inflation readings from the EMU countries will be published therefore investors may want to follow these to set expectations ahead of the reading for the whole bloc tomorrow. Moreover, Canada will publish its monthly GDP report for June that will be accompanied by the print for the whole Q2. Simultaneously to the Canadian data the PCE inflation report from the US will see daylight. At 10:00 am BST few sentiment reading from the euro area will be published but they rarely tend to impact the valuation of the common currency.
All day - CPI inflation from EMU countries. The CPI inflation data for August for the whole euro area will be released tomorrow but some member countries will publish their reports today. The price growth in Spain (8:00 am BST) is expected to remain unchanged at 2.3% YoY. However, investors will be most focused on the German reading (1:00 pm BST) as Germany has the biggest share in the EMU GDP. The CPI inflation is forecasted to remain unchanged there at 2% YoY but the monthly data is expected to show a 0.1% MoM advance against 0.3% MoM increase seen in July. One hour before the German reading (12:00 pm BST) Belgium will publish its figures.
1:30 pm BST - Canada, GDP report for June. While Canada is quite unusual when it comes to the GDP data as it publishes it on a monthly basis, today’s reading will be accompanied by the regular quarterly print for Q2. According to economists surveyed by Bloomberg agency the annualized quarterly growth is expected to accelerate to 3.1% against 1.3% seen last time. However, the reading for June on MoM basis is expected to show slowdown from 0.5% MoM to 0.1% MoM. While BoC follows into Fed’s footsteps to some extend when it comes to the monetary policy a significant and unexpected deterioration in Canadian economy growth could force both central bank’s policies to diverge from one another.
1:30 pm BST - US, PCE inflation for July. Despite a little disappointment in the latest US CPI inflation reading the consumer price growth is still robust in the world’s biggest economy. However, the Federal Reserve sets its inflation target in terms of PCE inflation (the weights in PCE and CPI goods basket differ) therefore today’s reading will surely attract investors’ attention. This gauge of price growth already surpassed the central bank’s target some time ago so the focus will be on whether it manages to stay there amid policy normalization or not. The headline reading is expected to show an advance to 2.3% YoY while the core gauge should also move 10 bp higher to 2% YoY.
Central bank speakers scheduled for today:
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6:30 pm BST - Bundesbank President Weidmann
USDCAD broke below the ascending trendline recently. The pair trades near the lower limit of the long term support zone. The Canadian GDP report may be crucial for the price movement in the nearby future. Source: xStation5
