The most important economic events expected this week 26 to 30 October 2020

Tuesday, October 27, 2020 - 02:52
Point Trader Group
The most important economic events expected this week 26 to 30 October 2020

The currency markets continue to exhibit volatility, and there are a lot of Level 1 events to be dealt with as market drivers. The European Central Bank, the Bank of Japan and the Bank of Canada will announce their interest rate decisions. We'll also look at a range of GDP and inflation reports.

 

Manufacturing PMIs in Germany and the Eurozone beat estimates of 58.0 and 54.4, respectively. Both readings were good in the expansionary territory, above the 50 level. It's a different story in the services sector, as the PMIs in Germany and the Eurozone indicated contraction at 48.9 and 46.2 respectively.

 

In the UK, employment numbers have been mixed. Jobless claims decreased to 28.1 thousand, which is much better than the estimate of 78.8 thousand. The unemployment rate rose to 4.5% from 4.1%. Wage growth improved to 0.0% after three consecutive declines.

 

Chinese GDP rebounded in the third quarter, with a gain of 4.9%. This was up from 3.2% in the second quarter. The consensus stood at 5.4%. In Australia, the Reserve Bank of Australia indicated in its minutes that it will cut interest rates at next week's policy meeting. This would likely mean a decline from 0.25% to 0.10%.

 

In the UK, the release of the strong CPI sent the Pound sharply higher on Wednesday. The CPI rose to 0.5% in September, up from 0.2% previously. The core reading accelerated to 1.3% from 0.9%.

 

In the US, jobless claims were excellent, falling to 787K, down from 898K previously. It was the lowest level since March, before the spread of Covid-19, which led to high levels of unemployment. Manufacturing PMI came in at 53.3, just below the estimate of 55.5. Services PMI improved to 56.0, beating estimates of 54.7. Both readings indicate expansion above the 50 level which separates contraction from expansion.

 

Australian Inflation Report: Wednesday, 03:30. The second-quarter consumer price index showed a decline of 1.9%, the first decline since 2016. The tightened CPI, which excludes the most volatile items in the major release, posted a rare drop, with a reading of -0.1%. The headline figure is expected to rebound in the third quarter, with expectations of 1.5%. The revised CPI is expected to show a small gain of 0.3%.

 

  Bank of Canada Rate Decision: Wed 17:00. The Bank of Canada cut interest rates to 0.25% in March and maintained this level. With the economy showing signs of recovery, the central bank is not expected to make any changes. If the price statement indicates that members are optimistic about economic conditions, the Canadian dollar may improve.

 

  German Consumer Price Index: Thursday, 16:00. Germany's inflation rate has fallen sharply. The Consumer Price Index posted three consecutive falls, with a reading of -0.2%. We are now waiting for the data for September.

 

  European Central Bank Interest Rate Decision: Thursday 15:45. The European Central Bank is likely to keep interest rates at 0.00%, so the focus will be on the rate statement and press conference with ECB President Christine Lagarde. Any discussion about deflation or the appreciation of the euro could affect the currency's movement.

 

  Bank of Japan interest rate decision: Thursday, temporary. No policy change is expected from the Bank of Japan, which has stubbornly maintained its 2 per cent inflation target, well above current inflation levels.

 

  German GDP: Friday 10:00. The German economy declined 10.1% in the second quarter, but a strong recovery is expected in the third quarter, with an estimate of 6.9%.

 

  Eurozone Inflation Report: Friday, 13:00. Deflation remains a major problem for eurozone policymakers. The Consumer Price Index posted two consecutive declines and is expected to drop another 0.3% in October. The core reading is expected to remain at 0.2%.

 

  Canada's GDP: Friday, 15:30. Canada releases GDP reports on a monthly basis. In July, the economy slowed to 3.0%, down from 6.5% previously. We are now awaiting the August release, which should be treated as a market mover.

 

  All times are KSA


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