The week of 14th-18th October 2024- A big week for inflation metrics!

The only “non-surprise” for me last week is the persistence of US inflation! September’s figures for Core and Headline CPI both ticked higher to 3.3% and 2.4% y.o.y respectively. German CPI, on the other hand remained stable at 1.6% y.o.y for September. Chinese CPI, released over the week-end came in lower at 0.4% y.o.y for September. Swiss PPI m.o.m for September was also lower at -0.1%.

This week, inflation metrics from several major economic zones are released; notably India, Canada, New Zealand, the UK, The Euro-zone and Japan. Collectively 60% of all trading in the US dollar is against these countries. The UK and Australia will also release employment data and the US will release Retail Sales. The ECB will announce an interest rate decision. The Chinese release GDP figures. We could be in for an interesting week.

Indian yearly CPI is set to rise to 5% y.o.y for September from 3.65% when it is released on Monday. On Tuesday, Canadians will be hoping their Core CPI remains at 1.5% and New Zealanders will be hoping that a quarterly drop to 2.3% from 3.3% backs up the rationale for last week’s 50bp cut in interest rates. Also on Tuesday, the UK releases employment data with the unemployment rate set to stay at 4.1%. The German ZEW Economic Sentiment survey is expected to be more sanguine with a predicted reading of 10.2 for October vs September’s 3.6.

On Wednesday UK inflation data is top of the bill. Analysts’ forecast a drop to 1.9%. There will be much interest surrounding the Services aspect of UK inflation. Outside of official UK figures, certain UK banks are raising their mortgage rates which will be a blow for those who are hoping for more Bank of England interest rate cuts in the near future.

Thursday starts off with Australian employment data. Expectations are for 25,200 new jobs to be created with the unemployment rate stable at 4.2%. Eurozone CPI is next. Septembers’ expectations are for Core to drop to 2.7% and Headline to 1.8% y.o.y for September. This leads us to an ECB interest rate decision in the early afternoon and a likely cut of 25bp to 3.4%. US Retail Sales are expected to have risen by 0.3% m.o.m.

Friday and there are two important data releases. First up Japanese inflation. National Core CPI is expected to fall by 0.5% to 2.3% y.o.y for September. We may see some action in the Japanese yen if this is the case. Chinese Q3 GDP will be released shortly afterwards and this is expected to print 4.6% y.o.y.

Ben Robson?

Ben Robson is Head of Institutional E-FX at Swiss Finance Corporation. He is also the Amazon Best Selling Author of Currency Kings – How Billion traders Made their Fortune Trading Forex. McGraw Hill