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Economic Events Upcoming: FOMC Implications, EMU and Tokyo CPI, China’s PMI – September 23, 2023

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In the world of economics, the upcoming week is set to be a dynamic one. With various crucial economic events and data releases that could shape market sentiments. Here’s a snapshot of what to watch out for:

Fed’s Revised Growth Forecasts Affect Equities

The recent central bank meetings brought a significant shift in the Federal Reserve’s outlook. Fed officials now anticipate fewer interest rate cuts next year than previously expected. This revision is driven by upgraded growth projections for this year and the next. Consequently, this news led to a decline in equities as the prospect of higher rates loomed.

Currency Market Updates: Sterling, Swiss Franc, and More

The currency markets witnessed notable movements, with Sterling and the Swiss Franc emerging as the weakest performers among the G10 currencies. Surprisingly, neither central bank opted to raise rates, contrary to market expectations. Norway leans towards a potential hike in Q4. While the Riksbank’s actions, akin to intervention, failed to provide significant strength to the Krona.

US Economic Events: Labor Market and GDP

The US economy poise between the recent FOMC meeting and the upcoming employment report. Expectations point toward continued labor market deceleration, with early estimates suggesting around 150k new nonfarm payroll jobs added. thus, a potential second-lowest figure since 2021. Meanwhile, the focus will also be on various economic indicators, including house prices, new home sales, durable goods orders, personal income, and consumption data.

Eurozone’s Hawkish Tilt and CPI Projections

In the Eurozone, some members of the European Central Bank advocate for a tightening cycle. However, the market remains skeptical, with only a marginal probability of a rate hike in Q4. The most critical data point to watch is the preliminary September CPI. Which is expected to show a sharp deceleration due to the base effect.

Japanese Economy: Retail Sales and Intervention Threats

Japan is facing challenges as it attempts to counteract the weakening yen, driven by the “higher for longer” signal from the Federal Reserve and rising US 10-year yields. Japanese officials have been considering intervention. But it carries risks such as selling Treasuries, which could push up US interest rates and encourage others to buy dollars.

UK’s Fiscal Woes and Sterling’s Performance

In the UK, fiscal issues persist as the country grapples with the aftermath of Truss’s short-lived tenure as prime minister. While fiscal orthodoxy expects to return, the budget deficit is continue to rise, challenging the government’s financial stability.

Canada’s Economic Data and Rate Expectations

Canada experienced an unexpected contraction in GDP in Q2. But subsequent data suggest that the weakness was overstated at economic events. The country’s economic performance will be closely watched, as rate expectations have shifted to potentially include a rate hike in Q4.

Australian Economy and New RBA Governor

Australia is set to report its August monthly CPI. Retail sales ahead of the first policy meeting under the leadership of new Governor Michele Bullock. The CPI expects to continue its downtrend. While retail sales may show the impact of the FIFA Women’s World Cup.

Mexico’s Trade and Employment Figures

Mexico will release its August trade and employment figures, shedding light on the country’s economic performance. Despite concerns of an overvalued currency, the peso has remained resilient, supported by remittances and relative interest rates.

As we head into the week ahead, these economic events and data releases will be crucial. Thus, important in shaping market trends and investor sentiment. Stay tuned for updates and analysis as we navigate these dynamic economic waters.

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Disclaimer: Please note that this article serves solely for informational purposes. Thus, should not be construed as financial advice. We strongly advise readers to conduct thorough research and consult with financial professionals before making any investment decisions.


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