Market Overview: Key Updates on CPI and PMI Figures

Good morning, traders! Welcome to the first edition of our Weekly Market Outlook, where we will navigate you through the essential economic data releases and events scheduled for the upcoming week. Every Monday, we will present our comprehensive overview to help you brace for market fluctuations and offer valuable insights into fundamental analysis.

Last Week’s Spotlight: US Inflation Cooling Down

Undoubtedly, last Tuesday stood out as the pivotal day of the week for Forex traders, thanks to the release of US inflation data. In October, the annual inflation rate in the US eased to 3.2%, a decline from both September and August’s 3.7%, and it fell below market projections of 3.3%. Additionally, US core consumer prices, which exclude volatile items like food and energy, showed a modest month-on-month increase of 0.2% in October, falling short of market expectations of a 0.3% rise and decelerating from September’s 0.3% increase. These figures provided traders with valuable insights as they prepare for the upcoming Federal Reserve (FED) interest rate decision scheduled for December 13, 2023.

Before the release, there were some possibilities of a rate hike in December, but they nearly disappeared after inflation print cast doubts. Currently, the CME FedWatch Tool signals a mere 0.2% chance of a hike, a significant factor contributing to the recent depreciation of the US Dollar (DXY), which plummeted by 1.50% on the release day. However, it’s not anticipated that there will be strong bullish momentum in the near term, as market sentiment suggests that the FED may have reached the peak of its hawkish monetary policy, with no further hikes of its benchmark interest rate expected.

In the same week, the United Kingdom released its inflation figures. The inflation rate in the UK dipped to 4.6% in October 2023, down from September and August’s 6.7%, and it fell short of market expectations of 4.8%. This drop marks the lowest rate since October 2021, partly attributable to the recent reduction in energy prices following Ofgem’s decision to lower the cap on household bills. Unlike the situation in the US, this decline in prices was accompanied by a rise in the value of the Pound, bringing good news to the UK economy after enduring several economic challenges.

Looking ahead to the upcoming week, the economic calendar appears relatively calm, with no groundbreaking releases or speeches. The key events of the week will be the release of CPI data from Canada and Japan, as well as Flash PMI data from major economies, scheduled between Wednesday and Friday.

Monday, November 20th, 2023

As usual, the beginning of the week starts off lightly with only a few releases on Monday. The PBoC (People’s Bank of China) earlier announced that it has maintained the Loan Prime Rate (LPR) unchanged, keeping the one-year rate at 3.45% and the five-year rate at 4.20%. Germany has also already released its PPI (Producer Price Index) data, which met market expectations with a 0.1% decline. 

Throughout the day, no other significant data are scheduled to be published. Andrew Bailey, the governor of the Bank of England (BoE), will speak at the Henry Plumb Memorial Lecture. This speech is not expected to exert influence on the markets. Later in the evening, the Statistics Agency of New Zealand will provide the latest updates on the country’s international trade.

Tuesday, November 21st, 2023

At midnight, Michele Bullock, the governor of the Reserve Bank of Australia (RBA), is set to deliver a speech at the ASIC Annual Forum in Melbourne. A quarter of an hour later, Carl Schwartz will speak at the Australian Securitisation Forum’s Conference in Sydney. While these speeches are scheduled, no groundbreaking information is anticipated to be announced during these events.

The Reserve Bank of Australia (RBA) and the Federal Open Market Committee (FOMC) will publish their Meeting Minutes. Central bank meeting minutes are detailed records of monetary policy meetings, outlining discussions on economic conditions, policy decisions, and future outlooks. They provide crucial insights into the central bank’s monetary strategy and are closely monitored by investors and analysts to gauge future economic and policy trends.

An hour before the London session starts, the FOCBS will release the latest data on international trade in Switzerland. 

Statistics Canada will provide CPI data. Looking back, Canada’s annual inflation rate dropped to 3.8% in September 2023 from 4% in the previous month, falling short of the anticipated 4%. This decline reinforced expectations that the Bank of Canada might avoid further rate hikes in the current cycle, despite acknowledging the risks associated with early cuts. Market expectations for Tuesday’s CPI are set at 3.2%. If this figure is confirmed, the recent rhetoric about maintaining unchanged rates is likely to persist. 

The United States is set to release Existing Home Sales data, which is presently at its lowest level since 2010. An hour following this, Christine Lagarde will give a speech at the high-level public discussion titled “Inflation kills democracy”. This event, marking the 100th anniversary of Germany’s 1923 currency reform, is organized by the German Ministry of Finance in Berlin. Monetary policy topics are not anticipated to be part of this speech.

Wednesday, November 22nd, 2023

Wednesday begins with a speech by Michele Bullock, the RBA’s Governor, who will discuss recent monetary policy decisions and the progress in implementing the recommendations of the Bank’s Review. 

In the United States, monthly data on new orders for manufactured durable goods and Initial Jobless Claims are due for release. Recently, there was an increase in Americans filing for unemployment benefits, with numbers rising by 13,000 to 231,000 in the week ending November 11th, marking the highest in nearly three months. This increase indicates that job seekers are facing more challenges in finding suitable employment and suggests a noticeable softening in the US labor market, consistent with the Federal Reserve’s recent indications of a slowing economy. 

Tiff Macklem, the Governor of the Bank of Canada (BoC), will give a speech at the Leaders Innovators Influencers Speaker Series. This speech is not expected to address recent economic data or monetary policy. 

The evening will see the commencement of a series of flash Manufacturing and Services PMI figures, starting in Australia. As of now, no specific expectations for these figures have been published.

Thursday, November 23rd, 2023

The day will proceed with the release of PMI data, starting with two major European economies, France and Germany, followed by the Eurozone and the UK. 

Traders interested in exotic currencies might pay attention to several interest rate decisions from smaller economies like Sweden, Turkey, and South Africa. 

The day will conclude with the CPI release from Japan. In September 2023, Japan’s annual inflation rate decreased to 3.0% from 3.2% in the previous month, marking the lowest rate since September 2022. Unless there are significant surprises, this inflation report is unlikely to prompt any major changes from the Bank of Japan

Friday, November 24th, 2023

Just after midnight, Japan will release new figures, this time focusing on its PMI development. 

Christine Lagarde will be participating in the youth event “Euro 20+ (Euro)pa der Zukunft”, organized by the Deutsche Bundesbank in Frankfurt (no impact expected). Concurrently, the Ifo Institute will release the latest data for the Business Climate Index, which assesses entrepreneurs’ sentiments about their current business situation and expectations.

Later in the afternoon, Canada will announce its retail sales figures. The series of PMI announcements will conclude with the release from the United States. These figures could influence the market, especially if they fail to meet expectations. The Manufacturing PMI is already projected to fall closely below the level of 50, and the Services PMI is likely to drop from 50.6 to 50.3.

E8X Dashboard

Stay ahead of key economic events and data releases with our E8X Dashboard. It’s all there under the Economic Calendar tab, offering a user-friendly interface for your convenience.

Don’t miss out on crucial market insights – visit the E8X Dashboard today!