The unceasing debate regarding the magnitude of the Fed’s interest rate cut will likely settle in the coming week. The US central bank will announce its decision on Wednesday. Most analysts still predict a 0.25% rate cut. However, the focus will likely shift to the Fed’s press conference, accompanying statements, and projections for interest rates, inflation, and economic growth over the next 1–3 years and beyond.
In the upcoming week, 16.09.2024 – 22.09.2024, the central banks of the UK, China, and Japan will hold monetary policy meetings. Besides, fresh inflation data will be published in Canada and the UK, leading to heightened volatility in the Canadian dollar and British pound during the data publication.
Additionally, during the week of 16.09.2024 – 22.09.2024, market participants will monitor the publication of macro data on the US, New Zealand, and Australia.
Note: During the coming week, new events may be added to the calendar, and / or some scheduled events may be cancelled. GMT time
The article covers the following subjects:
Key facts
- Monday: no important macro statistics is scheduled.
- Tuesday: Canada’s CPI, US retail sales.
- Wednesday: UK CPI, US Fed interest rate decision.
- Thursday: Bank of England meeting.
- Friday: Bank of Japan meeting.
- Key event of the week: US Fed interest rate decision.
Monday, September 16
There are no important macro statistics scheduled to be released.
Tuesday, September 17
12:30 – CAD: Canadian Consumer Price Indexes
The Consumer Price Index (CPI) reflects the retail price trends of a selected basket of goods and services. Meanwhile, the Core CPI excludes fruits, vegetables, gasoline, fuel oil, natural gas, mortgage interest, intercity transportation, and tobacco products. The inflation target for the Bank of Canada ranges between 1% and 3%. A higher CPI reading is a sign of a rate hike and is positive for the Canadian dollar.
Previous values:
- CPI: +0.4% (+2.5% YoY), -0.1% (+2.7% YoY), +0.6% (+2.9% YoY), +0.5% (+2.7% YoY), +0.6% (+2.9% YoY), +0.6% (+2.9% YoY), +0.3% (+2.8% YoY), 0% (+2.9% YoY), -0.3% (+3.4% YoY), +0.1% (+3.1% YoY), +0.1% (+3.1% YoY), -0.1% (+3.8% YoY), +0.4% (+4.0% YoY), +0.6% (+3.3% YoY), +0.1% (+2.8% YoY);
- Core CPI released by the Bank of Canada: +0.3% (+1.7% YoY), -0.1% (+1.9% YoY), +0.6% (+1.8% YoY), +0.2% (+1.6% YoY), +0.5% (+1.6% YoY), +0.5% (+2.0% YoY), +0.1% (+2.1% YoY), +0.1% (+2.4% YoY), -0.5% (+2.6% YoY), +0.1% (+2.8% YoY), +0.3% (+2.7% YoY), -0.1% (+2.8% YoY), +0.1% (+3.3% YoY), +0.5% (+3.2% YoY), -0.1% (+3.2% YoY).
The data suggests that inflation continues to decelerate, which prompts the Canadian central bank to consider implementing a dovish monetary policy. If the expected data is worse than the previous values, it will negatively affect the Canadian dollar, but if the data exceeds expectations, it will bolster the currency.
12:30 – USD: Retail Sales. Retail Sales Control Group
This Census Bureau report on retail sales reflects the total sales of US retailers of all sizes and types. The change in retail sales is a key indicator of consumer spending. The report is a leading indicator, and the data may be subject to significant revisions in the future. High indicator readings strengthen the US dollar, while low readings weaken it. A relative decline in the indicator may have a short-term negative impact on the US dollar, while a rise in the indicator will positively impact the currency. In July, the value of the indicator stood at +1.0% (after 0% in June, +0.1% in May, 0% in April, +0.7% in March, +0.6% in February, -0, 8% in January 2024, +0.6% in December 2023, +0.3%, -0.1% +0.7%, +0.6%, +0.7%, +0.2%, +0.3%, +0.4%, -1.0%, -0.6%, +3.2%, -0.8%, -1.1%, +1.1%, -0.2%, +0.7%, -0.4%, +1.0% in the previous months).
Retail sales is the main indicator of consumer spending in the United States, showing the change in the retail industry.
Retail sales serve as an indicator of domestic consumption, contributing the most to the US GDP and being one of the main factors of inflation risks increase or decrease. Deterioration of the indicator values is a negative factor for the US dollar.
Inflation deceleration may prompt the Fed to begin the process of easing monetary policy in September, according to economists. At the same time, most market participants still expect two interest rate cuts this year.
The Retail Control Group indicator gauges volume in the retail industry and is used to calculate price indexes for most goods. High readings strengthen the US dollar, while low results weaken the currency. A slight increase in the figures is unlikely to boost the dollar. If the data is lower than the previous readings, the dollar may be negatively impacted in the short term. Previous values: +0.3, +0.9%, +0.4%, -0.3%, +1.1%, 0%, -0.4% in January 2024, +0.8%, +0.4%, +0.2%, +0.6%, +0.1%, +1.0%, +0.6%, +0.2%, +0.7%, -0.3%, +0.5%, +2.3%, -0.3%, -0.5%, +0.4%, +0.5%, +0.4%, +1.1% in the earlier months of 2022.
Wednesday, September 18
06:00 – GBP: Consumer Price Index. Core Consumer Price Index
The Consumer Price Index (CPI) measures the retail prices of a group of goods and services comprising the UK consumer basket. The CPI is a key indicator of inflation. The pound’s movement on the currency market and the London Stock Exchange FTSE 100 index depend on the release of the CPI data.
In July, the UK consumer inflation fell -0.2% but rose +2.2% YoY, following +0.1% (+2.0% YoY) in June, +0.3% (+2.0% YoY) in May, +0.3% (+2, 3% YoY) in April, +0.6% (+3.2% YoY) in March, +0.6% (+3.4% YoY), -0.6% (+4.0% YoY) in January 2024, +0.4% (+4.0% YoY) in December. The data suggests persistent inflationary pressures in the UK, which are expected to bolster the British pound, particularly if the actual data surpasses the forecasted values.
An indicator reading below the forecast/previous value may cause the weakening of the British pound since low inflation will force the Bank of England to stick to the easy monetary policy course.
The Core CPI, published by the Office for National Statistics, measures the price change in a selected basket of goods and services (excluding food and energy) over a given period. It is a key indicator for assessing inflation and changes in consumer preferences. A positive result strengthens the British pound, while a negative outcome weakens it.
In July, the core CPI was +3.3% YoY after +3.5% in June and May, +3.9%, +4.2%, +4.5%, +5.1% in January 2024, December and November, after rising +5.7% +6.1%, +6.2% three months earlier. The publication will likely positively impact the British pound in the short term if it exceeds the forecasted and previous values. A reading below the forecast and/or previous values may weaken the pound.
18:00 – USD: US Fed Interest Rate Decision. Fed Commentary on Monetary Policy. FOMC Economic Projections
During the first half of 2024, the US Fed policymakers left monetary policy parameters unchanged at multiple meetings, maintaining the key interest rate at 5.50%.
Now, market participants are waiting for the US central bank to start the monetary easing cycle. Major analysts’ forecasts suggest that the Fed will start reducing the interest rate in September 2024.
However, the interest rate may rise if inflation increases again, as Federal Reserve chair Jerome Powell has repeatedly warned.
It is widely anticipated that there will be a 0.25% reduction, bringing the rate down to 5.25% at this meeting.
The financial market may experience higher volatility when the rate decision is announced, particularly in the US stock market and the US dollar, especially if the rate decision does not match the forecast or the Fed makes unexpected statements.
Powell’s commentaries may affect short-term and long-term trading in the US dollar. The Fed’s more aggressive approach to monetary policy is a positive factor that would strengthen the US dollar, while a more cautious position is negative for the greenback. Investors are eagerly awaiting Powell’s remarks on the Fed’s upcoming plans for this year and the next.
The Fed report will include projections on interest rates, inflation, and economic growth for the next 1–3 years and beyond. It will also provide insights into individual FOMC members’ views on interest rates.
18:30 – USD: US Federal Reserve Open Market Committee Press Conference
The US Federal Reserve Open Market Committee (FOMC) press conference lasts approximately one hour. The resolution is read in the first part of the meeting, followed by a Q&A session, which may increase market volatility. Any unexpected statements by Jerome Powell on the Fed’s monetary policy will cause a hike in volatility in the US dollar and the US stock market.
22:45 – NZD: New Zealand GDP for Q2
The data release will heighten volatility in the New Zealand dollar. Given the recent rise in commodity and agricultural prices, particularly for dairy products, New Zealand’s major export, and considering that the coronavirus pandemic has least affected New Zealand compared to other large economies, the New Zealand Q2 2024 GDP report will likely be positive.
Previous values YoY: +0.3%, -0.3%, -0.6%, +1.5%, +2.2%, +2.3%, +6.4%, +0.3%, +1.0%, +3.0% in Q4 2022.
Data so far remains contradictory, indicating a halt in the New Zealand economic recovery at the end of 2023 after a downturn in the first half of 2020. If data is worse than previous values, it will negatively affect the New Zealand dollar..
Thursday, September 19
01:30 – AUD: Employment Rate. Unemployment Rate
The employment rate reflects the monthly change in the number of employed Australian citizens. The indicator value increase positively impacts consumer spending, stimulating economic growth. A high reading is positive for the Australian dollar, while a low reading is negative. Previous indicator values: +58,200 in July, +50,200 in June, +39,700 in May, +38,500 in April, -6,600 in March, +500 in February, -65,100 in January 2024, +61,500 in December 2023, +55,000 in October, +6,700 in September, +64,900 in August, -14,600 in July, +32,600 in June, +75,900 in May, -4,300 in April, +53,000 in March, +64,600 in February, -11,500 in January, +14,600 in December, +64,000 in November, +32,200 in October, +900 in September, +33,500 in August, -40,900 in July, +88,400 in June, +60,600 in May, +4,000 in April, +17,900 in March, +77,400 in February, +12,900 in January 2022.
Besides, the Australian Bureau of Statistics will publish a report on the unemployment rate. It is an indicator that estimates the ratio of the share of the unemployed population to the total number of working-age citizens. The rise in the indicator readings demonstrates the weakening of the labor market, negatively impacting the national economy. A decrease in the indicator is positive for the Australian dollar.
Forecast: Australian unemployment has remained at its lowest levels and stood at 4.1% (against 4.2% in July, 4.1% in June, 4.0% in May, 3.8% in April, 3.7% in March and February, 4.1% in January, 3.9% in December and November, 3.8% in October, 3.6% in September, 3.7% in August and July, 3.5% in June, 3.6% in May, 3.7% in April, 3.5% in March and February, 3.7% in January, 3.5% in December, 3.4% in November and October, 3.5% in September and August, 3.4% in July, 3.5% in June, 3.9% in May and April, 4.0% in March and February, 4.2% in January), while the employment rate has increased.
The Reserve Bank of Australia has repeatedly stated that the Australian economy and the central bank’s plans are influenced by key indicators like the level of household debt and spending, wage growth, and the state of the labor market, in addition to the international trade situation. If the indicator readings are lower than expected, the Australian dollar may decline significantly in the short term, while higher data will strengthen the currency in the short term.
11:00 – GBP: Bank of England Interest Rate Decision. Bank of England Meeting Minutes. Bank of England’s Asset Purchase Facility. Monetary Policy Report
As a result of the August 2023 meeting, the interest rate was increased to 5.25%. The Bank of England’s Monetary Policy Committee has decided to raise borrowing costs amid a robust labor market to curb price growth. However, further tightening of monetary policy may be required to bring inflation to the 2.0% target.
Since the September 2023 meeting, the Bank of England has maintained a wait-and-see stance. Finally, on August 1, 2024, the Bank of England cut the interest rate by 0.25% to 5.00%, marking the first cut since August 2023.
At the upcoming meeting, the Bank of England may decide to cut interest rates again, given the declining inflation in the country, or take a pause, considering the positive macro data from the UK and the complex geopolitical situation in Europe, particularly in Ukraine.
Analysts believe that the Bank of England may reduce the interest rate. However, the market reaction may be unpredictable.
At the same time, the BoE will publish the Monetary Policy Committee (MPC) minutes, including a breakdown of the votes for and against interest rate changes. The main UK risks after Brexit are related to expectations of a slowdown in the country’s economic growth, as well as a large deficit in the UK balance of payments account.
Uncertainty about the Bank of England’s next step persists. Meanwhile, the British Pound and FTSE100 futures offer a lot of trading opportunities during the publication of the Bank’s rate decision.
Besides, the Bank of England will release its monetary policy report, providing an assessment of the economic outlook and inflation. Volatility in the British pound may grow sharply during this period. Apart from GDP, the UK inflation rate is one of the primary indicators for the Bank of England’s monetary policy stance. A soft tone of the report will likely boost the British stock market but cause the British pound to weaken. Conversely, the report’s harsh rhetoric regarding inflation, implying an interest rate hike, will strengthen the pound.
Friday, September 20
01:15 – CNY: People’s Bank of China Interest Rate Decision
Since May 2012, the People’s Bank of China has been steadily lowering its interest rate to support Chinese manufacturers. Last time, the bank lowered the rate in July 2024 after a long pause since August 2023, bringing the rate down by 0.1% to its current level of 3.35%.
In 2024, the world’s major central banks have also started a policy easing cycle amid slowing inflation. What will the Chinese central bank do this time after pausing since September 2023 and easing policy in July 2024?
The People’s Bank of China will likely keep the interest rate unchanged at 3.35% at this meeting, although other decisions are also possible.
Should the People’s Bank of China make statements that deviate from expectations, volatility may increase across the entire financial market, particularly in the Asian one. Investors will closely watch the bank’s assessment of the Chinese economy’s prospects and its policy stance in the short term.
After 03:00 (Exact Time Not Specified) – JPY: Bank of Japan Interest Rate Decision. Bank of Japan Press Conference and Commentary on Monetary Policy
The Bank of Japan will decide on the interest rate. At the moment, the benchmark rate in Japan is 0.15%. The rate will likely remain at the same level. If the rate is cut and returns to negative values, the yen may decline sharply in the currency market, and the Japanese stock market will likely increase. Anyway, a spike in the yen and Asian financial market volatility is expected during this period.
Since February 2016, the Bank of Japan has kept the deposit rate at -0.1% and the 10-year bond yield target around 0%.
During the 19 March meeting, the BoJ made the decision to increase the interest rate by 10 basis points, shifting it from -0.1% to 0% for the first time since 2007, thus concluding the period of negative interest rates that commenced in 2016. Concurrently, the target for long-term JGBs (YCC) was scrapped, although the BoJ intends to maintain the same level of JGB purchases per month without a specific target. On the other hand, the bank will cease the purchase of ETFs and REITs, gradually decrease, and eventually terminate the acquisition of commercial paper and corporate bonds within 12 months.
According to analysts, if the BoJ hints at further rate hikes, the yen will receive significant support.
During the press conference, BoJ governor Kazuo Ueda will comment on the monetary policy. The BoJ continues to adhere to an extra-soft monetary policy. According to former Japanese central bank governor Haruhiko Kuroda, Japan should continue its current soft monetary policy. Markets usually respond prominently to speeches by the BoJ governor. The governor will likely mention the monetary policy again during his speech, leading to increased volatility not only in the yen but also in Asian and global financial markets.
After 06:00 (Exact Time Not Specified) – JPY: Bank of Japan Press Conference
During the press conference, Bank of Japan Governor Kazuo Ueda, who succeeded Haruhiko Kuroda in April 2023, will comment on the bank’s monetary policy. Despite the bank’s earlier measures to stimulate the Japanese economy, inflation remains low, and production and consumption are falling, which negatively affects export-oriented Japanese manufacturers. Markets usually react noticeably to speeches of the BoJ governor. If he touches on the topic of monetary policy during his speech, volatility will rise not only in the yen but also across Asian and global financial markets.
06:00 – GBP: Retail Sales
The retail sales economic indicator is a key metric that tracks the level of consumer demand and significantly impacts market performance and the national currency. Additionally, it serves as an indirect indicator of inflation, making it a key concern for a country’s central bank and market participants.
The Retail Sales report is released by the UK Office for National Statistics. The Retail Sales change is considered to indicate the consumer spending level. High indicator values are positive for the British pound, while low readings are negative.
Previous values YOY: +1.4, -1.2%, +1.3%, -2.3%, +0.4%, -0.3%, +0.4% in January 2024, -2.8% in December 2023, +0.0%, -2.3%, -1.1%, -1.2%, -3.1%, -1.8 in June 2023.
12:30 – CAD: Bank of Canada Governor Tiff Macklem’s Speech
The Canadian economy, as well as the global economy, has been slowing down since 2020, primarily due to the impact of the coronavirus pandemic. Initially, Tiff Macklem stated that the country’s economy was fairly resilient. However, the situation has changed rapidly, and not for the better. Now, it will be interesting to hear Macklem’s thoughts on the sustainability of the Canadian economy and the central bank’s monetary policy in the face of declining inflation. In July, the annual Canadian CPI stood at +1.7% after +1.9%, +1.8%, +1.6%, +2.0%, +2.1%, +2.4% in January 2024. The Bank of Canada’s inflation target is in the 1% to 3% range.
If Tiff Macklem mentions the Bank of Canada’s monetary policy, the volatility in the Canadian dollar will grow sharply. A signal of monetary policy tightening will bolster the Canadian dollar. Conversely, an intent to ease monetary policy will have a negative impact on the currency.
Additionally, Tiff Macklem will likely clarify the Bank of Canada’s recent interest rate decision and provide guidance for investors ahead of the central bank’s next meeting, which is expected to take place next month.
Price chart of GBPUSD in real time mode
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteFinance. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.
{{value}} ( {{count}} {{title}} )
This post is originally published on LITEFINANCE.
