Weekly Market Outlook: Inflation, GDP & Jobs Data

The week ahead could be somewhat quiet after the conclusion of the monetary policy meetings of most central banks. Investors look to the data which includes inflation, GDP estimates, and employment across various corners.

A slow week in the US will see only the consumer price index report and the monthly retail sales data as the main economic data points of interest. Closer to the end of the week, industrial production and housing-related data will be coming out.

In the eurozone, the second revised estimates on the second-quarter GDP will be coming out this week. The GDP figures could remain unchanged. The flat expectations come as the eurozone’s economy is already known to have risen at a slower pace compared to the first quarter of the year. Investors will be looking to assess the impact of the weak data on the ECB.

Australia will be reporting on its monthly labor market statistics this week. The RBA has been hoping for an uptick in the labor market data. But, if statistics slow, this could potentially push the central bank into taking more easing measures. However, at the same time, officials could buy more time and wait for a few more months of data as far as jobs are concerned.

Data from China will see the release of industrial production and retail sales for July. Expectations remain tame especially in light of the recent US-China trade war escalation. A slowdown in the data could continue to keep investors concerned about the global economy.

Here’s a quick recap of what’s to come in the currency markets this week.

USD Takes a Backseat

The economic data from the United States this week is somewhat quiet. Only the monthly CPI data and the retail sales report will have an impact if any.

The inflation data comes on the back of the recent Fed rate cut. But investors will be looking to see if the central bank was right in justifying its stance on a possible one-and-done rate cut. The Core PCE, which is the Fed’s preferred gauge of inflation, fell from the Fed’s 2.0% inflation target rate. We could see similar trends in the monthly inflation (CPI) data as well.

Retail sales will also be interesting to watch this week. Retail sales have been somewhat volatile over the past few months. But with the prospects of lower rates, there is a good chance that retail sales could maintain the upside.

The recent jobs report for July showed that wages grew 0.3% on the month, a slight uptick from the previous figures of a 0.2% increase. The higher wages amid tame inflation could see consumers spending more, especially with lower interest rates on the horizon.

Housing starts and industrial production numbers make up the data for the rest of the week. The continued mixed signals from the housing markets are likely to persist into July as well. Industrial production figures will also provide a glimpse into how the US economy has been faring so far.

Brexit to Sideline UK’s Inflation Data

The UK’s Office for National Statistics (ONS) will be reporting the monthly inflation numbers for the month of July. Consumer prices in the UK have been somewhat stable but anchored close to the BoE’s inflation target rate of 2.0%.

Following the conclusion of the BoE’s monetary policy meeting just a week ago, the inflation data could be ignored. Focus will, of course, remain on how the UK and the EU navigate the Brexit deadlock.

Under the circumstances, economic data such as the inflation report will be brushed aside. Inflation in July, across other economies, showed a modest uptick. This could be the same case with the UK’s inflation report as well.

Regardless of the outcome of this week’s inflation data, investors are likely to sit on their hands. This is also expected to be the same outcome from the BoE’s rate-setting committee, at least until further clarity is reached on the Brexit issue.

About the Author
“John Benjamin Resident Analyst at Orbex. John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.” [space height="10"] At Orbex, we are dedicated to serving our clients responsibly with the latest innovations in forex tools and resources to assist you in trading. Please Director at Visit our site for more details.

Leave a Reply