Investors will be offered some crucial macroeconomic readings from the US and European economy in the upcoming week. However, it is not hard data that floods the calendar but scheduled meetings of top-tier central banks. Bank of Canada is the only one expected to change the level of interest rates but investors will also pay close attention to ECB amid turmoil surrounding Italian budget and CBRT following the release of pastor Brunson.
The Monday’s calendar is not so busy as just two readings are scheduled. Namely, investors will be offered Chicago Fed National Activity Index at 1:30 pm BST. Economists surveyed by Bloomberg suggest the gauge will show a 0.22 increase against 0.18 previously. At the same time, Canadian Wholesale Trade Sales will be published. It’s expected to decline to -0.2% MoM from 1.5% MoM.
PMI indices and the ECB meeting (PMIs - Wednesday, 9:00 am BST; ECB meeting - Thursday, 12:45 pm BST)
Manufacturing PMI gauge from the eurozone continued to move lower with each subsequent reading. Situation looks a bit better when it comes to the services sector as we saw a minor bounce higher in September. Nevertheless, both indices are forecasted to decline in October but scale of a drop is expected to small. Apart from the survey data, investors from Europe will focus on the ECB meeting. As no shift in monetary policy settings is expected traders will look for hints on inflation (headline gauge advanced in September but core measure stayed subdued) and remarks on EMU stability amid proposed Italian budget. Affected markets: EURUSD, DE30.
GDP report from the US (Friday, 1:30 pm BST)
United States economy had a stellar second quarter with GDP growth reaching 4.2% YoY. It was the quickest pace of growth since the third quarter of 2014. However, market consensus suggests that the slowdown has come. While survey data from the US keeps improving it is hard to play down a deterioration in hard data. According to the latest IMF projections both China and the US will start to feel the pain of the trade conflict next year. Nevertheless, investors will analyze GDP report carefully to see whether trade war has taken its toll already and if so - how severe its impact is. Affected markets: US500, Gold.
Other central banks (Riksbank, Bank of Canada - Wednesday, Norges Bank and CBRT - Thursday)
While the ECB meeting will certainly be in the spotlight next week one cannot forget about a number of other central banks making their decisions. Bank of Canada is widely expected to follow into Fed’s footsteps and deliver a 25 bp rate hike. No change in the level of interest rates is expected when it comes to Norges Bank and Riksbank. However, one should be aware that in case of the former some hawkish remarks may occur as price growth continued to be robust in September and the Bank decided to lift rates last month. Last but not least, Central Bank of the Republic of Turkey is expected to stay on hold on Thursday and leave one week repo rate at 24%. As the diplomatic spat with the US was resolved sell-off of the Turkish assets eased. However, one should keep in mind that macroeconomic data keeps painting a grim picture of the Turkish economy and CBRT will have to address it with its policy. Affected markets: USDCAD, USDTRY.
