Sep 10 – 14: Forex Week Ahead – ECB & BOE Monetary Policy Decisions Awaited
Arslan Butt • 3 min read
The first week of September remained extremely volatile in the wake of many high impact events, especially the US labor market report. The US job growth stimulated in August, with wages adding their largest annual increase in 9 years. Looks like the economy is getting the positive impact of the Trump administration’s escalating trade war with China.
The upcoming week is also likely to remain volatile as investors await the monetary policy meeting from the European Central Bank and the Bank of England. Watch out the highlights for the next week.
Watchlist – Top Economic Events This Week
Monday – Sep 10
GBP – GDP m/m
At 9:30 (GMT), you should see the GDP data which is expected to jump from 0.1% to 0.2% in September. It’s gonna be the first GDP release of Q3 2018. It will be exciting to see if worries about a no-deal Brexit have already impacted economic activity.
GBP – Manufacturing Production m/m
Besides the GDP, the UK economy is due to release the manufacturing production and trade balance numbers at the same time. The manufacturing production is forecast to drop to 0.2% vs. 0.4% previously. While the trade balance carries expectations of the 11.7B deficit which is higher than 11.4B previously.
Tuesday – Sep 12
GBP – Average Earnings Index 3m/y
It’s a leading indicator of consumer inflation and shows a change in price for businesses and the government pay for labor, including bonuses. Simply put, when businesses pay more for labor, the higher costs are usually passed on to the consumer which leads to inflation.
The UK’s Office for National Statistics reported 2.4% average earnings in August, whereas, economists are expecting it to rise by 2.5% in this month.
For all the newbies, it’s one of the most eyed economic data as it shows a change in the number of people claiming unemployment-related benefits during the previous month. The recent jobs report is expected to be positive. Jobless claims rose to 6.2k in July but economists are expecting a less number (3.6k) of claims in August. The smaller figure shows a growth in the labor market and it encourages the BOE (Bank of England) to keep the policy hawkish.
In addition to this, the unemployment rate is expected to remain unchanged at 4%.
Wednesday – Sep 12
USD – PPI m/m
The producer’s price index is considered as a leading indicator of consumer inflation. When producers charge extra for goods and services, the higher costs are usually passed on to the consumer. So, the higher PPI can lead to higher CPI which pressurises central banks to release hawkish monetary policies. The current PPI figure is anticipated to grow by 0.2% m/m in Aug vs. 0.0% growth in July.
Thursday – Sep 13
Here comes a big day. The economic calendar is carrying monitory policy decisions from the BOE and ECB.
GBP – Bank of England Policy Decision
Back in August, the Bank of England increased the interest rate to 0.75% with a unanimous vote to move rates. The decision was followed by the quarterly inflation report. The BOE reacted to escalating inflation but the high level of uncertainty arising from Brexit kept the Pound in check.
The decision is coming out at 12:00 (GMT) and the UK’s central bank is widely expected to keep the interest rates on hold at 0.75% and we can expect a muted impact on GBP until and unless MPC shows a change in voting.
EUR – European Central Bank Policy Decision
Main Refinancing Rate – At 11:45 (GMT), the European Central Bank will be releasing its refinancing rate (interest rate) which is widely expected to remain unchanged at 0.00%. Out of curiosity, an initial rate hike is projected in mid-2019. So, what can we look forward to in this meeting? It’s Mario Draghi and his press conference.
ECB Press Conference – The ECB is widely expected to stand pat this month, and investors speculate that it may offer hints on its plans to start tapering its bond purchases this year. Any upgrade or downgrade of inflation and GDP forecasts may be indicative of the next moves by the central bank. Overall, no big movement is expected on this release.
USD – CPI m/m
At 13:30 (GMT), the Bureau of Labor Statistics is expected to show a change in the price of goods and services purchased by consumers. The US inflation is expected to rise by 0.3% vs. 0.2% in August.
Friday – Sep 14
USD – Retail Sales m/m
The Census Bureau is due to release the retail sales data at 13:30 (GMT). It’s the primary gauge of consumer spending which accounts for the majority of overall economic activity. In August, the retail sales grew by 0.5% vs. the forecast of 0.1%.
This month, economists are expecting a 0.4% rise in retail sales and a 0.5% rise in core retail sales which 0.1% less than previous months figure. A higher number of sales indicate a higher inflation and growing economy. So, the positive data will be good for the Greenback.
That’s it for now, stay tuned to FX Leaders Economic Calendar for the live coverage of these economic events. Have an awesome week ahead…