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Weekly Market Outlook (18-22 September)

Upcoming Events,

  • monday: NZ Services PMI, US NAHB Housing Market Index.
  • Tuesday: RBA meeting minutes, Canada CPI, US building permits and housing starts.
  • Wednesday: PBOC LPR, UK CPI, Summary of BoC deliberations, FOMC policy decision.
  • Thursday: NZ GDP, SNB policy decision, BOE policy decision, US jobless claims.
  • Friday: Japan CPI, BOJ policy decision, UK Retail Sales, Canada Retail Sales, Flash PMI for AU, JP, UK, EZ, US.


Canadian headline CPI Y/Y is expected to increase by 3.8% versus 3.3% previously, while the M/M reading is seen at 0.2% versus 0.6% previously. The BoC continued to complain about slow deflation in underlying measures, which beat expectations in past months, although they were lower than previous readings. There is currently no consensus on the main measures, but given the recent rise in wage growth the higher figures would put the central bank in a difficult position.

Canadian inflation measures


UK Headline CPI Y/Y is expected to increase by 7.1% versus 6.8% previously seen, while the M/M reading is 0.7% versus -0.4% previously seen. Such a large increase has been caused by high energy prices as central banks are focusing more on key measures at this time. UK Core CPI Y/Y is expected to be 6.8% versus 6.9% previously, while the M/M figure is seen at an uncomfortable 0.7% versus 0.3% previously. The report is unlikely to change the market’s pricing for this week’s BoE meeting, where the central bank is expected to hike by 25 bps, but it will influence expectations for the next meetings.

UK core CPI year-on-year

The Fed is expected to keep rates steady at 5.25-5.50%, but the market’s focus will be on the Summary of Economic Expectations (SEP) and dot plots to see if the central bank still sees the need for another rate hike. Is or has already reached its terminal rate. As a reminder, in the June dot plot the Fed raised its terminal rate projections by 50 bps to 5.6% from the previous 5.1% in March. Given the recent strength in economic data along with expectations of a rate cut for the third quarter of 2024, the market sees a 50/50 chance of another rate hike in the November meeting.

federal Reserve


The SNB is expected to keep rates steady at 1.75% given the weak economic data and both headline and core inflation measures in the SNB’s 0-2% target band.


The BOE is expected to hike the bank rate by 25 bps, taking it to 5.50%, with Dhingra in general disagreement. Recent communications appear to be leaning towards keeping interest rates high for longer with further tightening down the pipeline. However, the central bank should keep all options in mind considering its inflation and wage growth rates.


US jobless claims once again beat expectations last week as the labor market continues to soften, although it remains quite tight. The consensus this week sees initial claims at 225K vs 220K East and continuing claims at 1695K vs 1688K East.

America’s initial claims


The BOJ is expected to keep everything unchanged with rates at -0.10% and the YCC targeting the 10 year JGB at 0%, with a soft cap at -/+0.50% and a hard cap at 1.00%. The yield on the 10-year recently rose to 0.70% following BOJ Governor Ueda’s comments about a “quiet exit” from the NIRP if data supports such a move. Of course, the BOJ intervened last week by buying unlimited amounts of JGBs as they have already reiterated several times that they will do so if the pace of moves gets too steep. Furthermore, wage growth data continues to point towards a recession, and this is something the BOJ watches very carefully.


Flash PMIs are usually big market movers because they are the most important leading indicators we have. The market should focus on Eurozone and US PMIs, the outcome of which is likely to have a big impact on global markets. The US Manufacturing PMI is expected to be in line with prior reading at 47.9, while the Services PMI is seen lower at 50.3 versus 50.5.


Source: www.forexlive.com

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