The Forex Week Ahead

The Forex Week Ahead 9th -13th October

The Forex Week Ahead North America Wednesday’s minutes to the FOMC meeting on September 20th might be a tad pedestrian in nature. Top Fed officials also speak over the course of the week, including Governor Powell, a candidate for the top job, who speaks on two occasions. Governor Brainard and four regional presidents also speak, including Dallas’s Kaplan (twice), Chicago’s Evans (twice), Minneapolis’s Kashkari, and Boston’s Rosengren. Friday will be the main focal point for data risk including CPI and retail sales, both for September. Brace for a massive US retail sales report on Friday. Auto sales climbed from 16.03 million in August to 18.47 million in September (17.15 was consensus). Given the weight in retail sales, this could single handedly add about 3% points to MoM retail sales growth. There has only been one month when sales topped 18million in late 2001. Replacing hurricane damaged autos is a part of the story but sales also rose in other regions which suggests it’s not just about hurricanes. Vehicle sales numbers will likely cool in future months but remain elevated because it takes months to replace the autos and because of solid fundamentals in other regions. The US also releases the JOLTS labour market survey including job vacancies (Wednesday), producer prices for September (Thursday) and UoM consumer sentiment for October (Friday).

Europe ECB Executive Board Member Peter Praet speaks Wednesday on “European Exit Strategies” on Wednesday in NYC. He will do so at a conference on “Globalisation Dynamics—EU and US perspectives” sponsored by The European Money and Finance Forum. While the conference is fairly wide-ranging in the topics it addresses, another session will be delivered by Simon Potter from the NY Fed on “American Exit Strategies” which suggests a significant conference theme will be the way out across major global central banks.Eyes in Spain and abroad may be upon Catalonia’s regional legislature (or an alternate location) at the start of the week. The head of the Catalan National Assembly has vowed to meet in order to discuss the aftermath of the illegal vote to separate and whether or not to unilaterally declare independence from Spain. The scope for tensions to flare may be high in the face of a united front against the separatists including the Spanish government and the King of Spain while the EU has made it clear it is staying out of the affair and unwilling to acknowledge the vote. Despite a rally in Spanish government bond yields following a successful auction, Spanish spreads continue to reflect a material widening of perceived risks in lending to Spain over Germany. Data and other event risk will be fairly modest and focused upon industrial output reports for August from across the Eurozone and the UK, plus Eurozone CPI revisions and trade figures from the UK and Germany.

Asia Will China continue the swing toward more bullish global growth readings when the country releases a series of macro reports over the coming week? Whether or not it does offers global market risks with little else of consequence expected on the Asian calendar over the coming week. On Monday, China releases the private sector version of its purchasing managers’ indices for the service sector and the broad composite reading that combines the already released manufacturing PMI and the services PMI. China also releases trade figures toward the end of next week, and at some point next week or the following it is expected to release money supply, credit aggregates and foreign direct investment. More regional developments will include the RBA’s Financial Stability Review on Thursday night that will update thinking on housing and other risks.

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