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The most important economic events expected this week 05 October to 09 October 2020
The US dollar fell against most of the G10 currencies last week, but managed to gain ground against the Japanese yen. There is a raft of key releases for this week, including the services PMIs in the euro zone, the Reserve Bank of Australia decision on interest rates, the UK GDP and Canadian employment data.
Low inflation continues to be a headache for policymakers in the Eurozone, as September data is set to decline. Germany's CPI fell 0.2% in September, its third consecutive decline. Inflation in the Eurozone fell to -0.3%, its lowest level in more than four years, from -0.2% in the previous month. The core reading decreased to 0.4%, down from 0.2%. This increases pressure on the European Central Bank to add more stimulus.
In the UK, GDP for the second quarter was dismal, reflecting the economic downturn in the aftermath of Covid-19. The second-quarter estimate was revised upwards to -19.8% from -20.4%. Canada's monthly GDP report showed a gain of 3.0% in July, beating expectations of 2.9%. The economy has grown for three months in a row, after a sharp drop of 11.6% in April.
Manufacturing PMIs in the Eurozone and German improved in September with readings of 53.7 and 53.6 respectively. Level 50 neutral separates contraction from expansion.
In the US, the Conference Board Consumer Confidence Index jumped to 101.8 in September, up from 86.3. This easily beats expectations of 90.0. GDP estimate for the third quarter was revised upward to 31.4% from 31.7%. On the manufacturing front, the ISM Manufacturing PMI remained well in expansionary territory, at 55.4, down slightly from 56.0. The neutral 50 mark separates the contraction from the stretch.
Job growth slowed sharply in September, as the number of non-farm payrolls fell to 661,000, down from 1.37 million previously. This was significantly weaker than the estimate of 900,000. Wage growth fell from 0.4% to 0.1%, missing expectations of 0.5%. The manufacturing sector continues to expand, with the second estimate of the manufacturing PMI coming in at 54.1, down slightly from the initial estimate of 54.3.
RBA interest rate decision: Tuesday, 06:30. The Reserve Bank of Australia has kept interest rates at 0.25% since March. Will the central bank pull the trigger and cut interest rates at the next meeting? The bank hinted that it will cut interest rates, and if it continues, the Aussie may lose ground.
FOMC Meeting Minutes: Wednesday, 17:40. The Federal Reserve will release the minutes of its September policy meeting. Investors will be interested in hearing the opinions of policymakers regarding the health of the US economy in light of the continuing Covid-19 pandemic.
European Central Bank Monetary Policy Meetings Accounts: Thursday, 14:30. The European Central Bank will release the minutes of its September policy meeting. Investors will be contacted research to see if policy makers have discussed the need for more flexibility.
RBA Financial Stability Review: Friday, 1:30. The central bank publishes a report on financial stability twice a year. Aside from a stability assessment, the post also provides economic figures and may discuss monetary policy.
British GDP: Friday, 09:00. The monthly GDP report showed that the economy rose 6.6% in July, posting growth for the third month in a row. Further gains are expected for August, with an estimate of 4.6%.
Canadian Employment Report: Friday, 15:30. The economy created 245.8k jobs in August, down from 418.5k in July. The unemployment rate continued to decline and fell to 10.2% in August, down sharply from 10.9%. We are now awaiting the September data, which should be treated as a market mover.
All times are KSA
