Next week starts quietly, but it does not stay that way.
The economic calendar gets going on Wednesday with the US CPI report, followed by Australian employment that evening. Thursday brings UK GDP before a busy 8:30 AM window in the US, with producer prices, retail sales, jobless claims and the Philadelphia Fed manufacturing index all released at the same time.
For traders, the question is how those reports change expectations for growth, inflation and interest rates. Are price pressures accelerating? Is the consumer still spending? Are higher borrowing costs starting to slow activity?
The answers could provide the next shove for the dollar, yields and stocks.
All times below are US Eastern. Forecasts and previous readings reflect the calendar supplied on October 9 and may change before release.
Monday, October 12: A quiet start
There are no major releases listed on the supplied calendar. Monday is also the US Columbus Day holiday.
A light calendar does not mean traders can ignore the market. Weekend developments and geopolitical headlines can still move prices, particularly oil. Be aware of liquidity conditions and whether an initial move has enough participation to keep going.
Tuesday, October 13: ECB commentary
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10:10 PM — ECB President Christine Lagarde speaks.
The focus will be on any comments about inflation, growth and the outlook for ECB policy. For EURUSD traders, the question is whether her remarks change expectations for European rates relative to US rates.
Tuesday is otherwise a relatively quiet day on the supplied calendar. The bigger scheduled risks arrive on Wednesday and Thursday.
Wednesday, October 14: US CPI takes center stage
Central bank commentary comes first:
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1:30 AM — Bank of England Governor Andrew Bailey speaks.
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2:05 AM — Bank of Canada Governor Tiff Macklem speaks.
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4:30 AM — ECB President Christine Lagarde speaks.
Then comes the main event:
8:30 AM — US September CPI
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Headline CPI month over month: Expected +0.6%, versus +0.4% previously.
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Headline CPI year over year: Expected 3.6%, versus 3.4% previously.
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Core CPI month over month: Expected +0.2%, versus +0.3% previously.
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Core CPI year over year: Expected 2.5%, versus 2.4% previously.
The Bureau of Labor Statistics confirms the Wednesday release at 8:30 AM ET.
The expectations tell two different stories. Headline inflation is expected to accelerate, while the monthly core reading, which excludes food and energy, is expected to slow.
That puts added importance on the details. Is the increase concentrated in energy, or are price pressures spreading into other categories?
A hotter core reading would likely put upward pressure on yields and support the dollar, all else equal. A softer reading could give buyers of bonds some relief and take some support away from the greenback.
Watch the initial reaction, but also watch whether the price can hold beyond the technical levels broken on the release. An initial break that fails tells traders something too.
8:30 PM — Australian September employment
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Employment change: Expected +20.0K, versus +39.5K previously.
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Unemployment rate: Expected 4.6%, unchanged from the previous reading.
The Australian report is released Thursday morning locally, but Wednesday evening in US Eastern time.
For AUDUSD traders, look beyond the headline jobs number. Full-time versus part-time employment, participation and the unemployment rate will help determine whether the labor market remains firm or is starting to soften.
Thursday, October 15: Growth, inflation and spending collide
The European session starts with central bank commentary and UK growth data:
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12:30 AM — Swiss National Bank Chairman Martin Schlegel speaks.
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2:00 AM — UK August GDP: Expected −0.1% month over month, versus +0.4% previously.
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3:30 AM — Bank of England Governor Andrew Bailey speaks.
The UK forecast points to a monthly contraction after the previous increase. For GBPUSD, a weaker-than-expected result could weigh on the pound if it encourages expectations for a softer Bank of England policy outlook.
Bailey’s comments after the release will also be worth monitoring.
8:30 AM — A busy US release window
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Headline PPI month over month: Expected +0.5%, versus +0.4% previously.
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Core PPI month over month: Expected +0.3%, versus +0.2% previously.
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Retail sales month over month: Expected +0.3%, versus +1.2% previously.
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Retail sales excluding autos: Expected +0.5%, versus +1.4% previously.
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Philadelphia Fed manufacturing index: Expected 26.5, versus 37.8 previously.
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Initial jobless claims: Expected 195K, versus 197K previously.
PPI and retail sales will compete for the top influencer on Thursday but claims and Philly Fed will also be released at the same time. This is a window where traders need to be prepared for competing signals.
PPI will add another piece to the inflation picture following Wednesday’s CPI. Retail sales will show whether consumer spending continues to support growth. Claims will provide a timely labor-market check, while the Philadelphia Fed survey offers an early look at October manufacturing conditions.
Also, the calendar’s “core retail sales” measure refers to sales excluding autos. Traders should watch the separate control group, which feeds into estimates of goods consumption in GDP, along with revisions to the previous month.
Stronger spending and hotter inflation could reinforce each other and push yields higher. Softer spending combined with hotter inflation would present a more difficult mix for markets.
With several reports arriving together, the first move may change as traders work through the details.
Late Thursday: Central bank speakers remain in focus
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10:00 PM — Bank of England Governor Andrew Bailey speaks.
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11:30 PM — Kevin Warsh, Federal Reserve Chair, speaks.
Any policy comments from Kevin could be particularly relevant after the week’s US inflation and spending reports.
Friday, October 16: Macklem and another inflation update
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12:15 AM — Bank of Canada Governor Tiff Macklem speaks.
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8:30 AM — US September import and export price indexes.
The import and export price release will provide another check on price pressures heading into the end of the week.
What matters for traders
The biggest scheduled risks are concentrated in two US mornings:
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Wednesday at 8:30 AM: CPI.
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Thursday at 8:30 AM: PPI, retail sales, claims and the Philadelphia Fed survey.
Australian employment and UK GDP provide separate catalysts for the AUD and GBP, while central bank commentary could reinforce or challenge the market’s interpretation of the data.
Know the release times. Know the expectations. Know the technical levels that define your risk.
The data can provide the shove. The price action will tell us whether buyers or sellers can keep control.
This article was written by Greg Michalowski at investinglive.com.