Week Ahead - Top 5 Events: US Inflation Rate; FOMC Minutes; Australia Jobs Report; China CPI, Loans; US Retail Sales
Oct 12, 2021
For the full week ahead, please visit the DailyFX Economic Calendar.
Price pressures remain elevated in the United States, so much so that Federal Reserve officials have acknowledged that the inflation mandate “has been met.” Forthcoming data suggests that US inflation rates might not be climbing any further, but instead leveling off – but leveling off at a level that will continue to suggest that the ‘inflation mandate has been met.’
According to a Bloomberg News survey, the headline September US inflation rate is due in unchanged at +0.3% (m/m) and unchanged at +5.3% (y/y), with the core inflation rate (ex-energy and food) due in at +0.3% from +0.1% (m/m) and unchanged at +4% (y/y). The data will likely help keep US rate expectations firm, which have been supportive of a stronger US Dollar.
While the September Fed meeting did not yield a taper announcement, it appears that the groundwork has been laid for a reduction in asset purchases imminently. While the dot plot revealed that policymakers were split on the timing of rate hikes – nine foresaw a 25-bps hike in 2022, while nine didn’t see a hike until 2023 -- the timing of tapering asset purchases seems more concrete. Several policymakers, including those with historically dovish tendencies like Evans and Kashkari, have suggested that it may be appropriate to reduce asset purchases starting this year.
Lockdowns through the middle part of 2021 plagued the Australian economy, which lost a dramatic -146.3K jobs in August, erasing the prior three months of gains. While the Australian vaccination has started to rise, suggesting that the economy will soon rebound, the lockdowns continued into September, suggesting that jobs data will remain weak. According to a Bloomberg News survey, the Australian economy lost -120K jobs in August, another significant drop. The unemployment rate is expected to jump from 4.5% to 4.7%.
But if the data come out even marginally better than expected, the largest net-short position in the futures market leaves the Australian Dollar well-positioned for a short covering rally that could help pairs like AUD/JPY and AUD/USD realize their bullish technical potential.
The Chinese economy has lost a step or two in recent months, plagued by concerns that problems with property developer Evergrande are emblematic of more serious issues infecting the economy at large. But the upcoming slate of economic data has a chance to soothe fears, insofar as a rebound in Chinese inflation figures and lending data could help investors believe that a ‘soft landing’ is more likely than a ‘hard landing’ – even if that landing is cushioned by more debt cycling through the world’s second largest economy.
Consumption is the most important part of the US economy, generating around 70% of the headline GDP figure. The best monthly insight we have into consumption trends in the US might arguably be the Advance Retail Sales report. US economic data in September was not great, with growth expectations shrinking to their lowest level of the quarter. According to a Bloomberg News survey, consumption slumped with the headline Advance Retail Sales due in at -0.2% from +0.7% (m/m) in August. Similarly, the Retail Sales Control Group, the input used to calculate GDP, is due in at +0.5% from +2.5% (m/m).
Based on the data received thus far about 3Q’21, the Atlanta Fed GDPNow growth forecast is now at its lowest expectation of the quarter at +1.3% annualized. This was due to “an increase in the nowcast of third-quarter real gross private domestic investment growth from +10.5% to +10.7% was offset by a decrease in the nowcast of third-quarter real personal consumption expenditures growth from +1.1% to +1.0%.” Another revision lower could be due if the September US retail sales report simply meets expectations – which may make for a weak end to the week for the US Dollar.Written by Christopher Vecchio, CFA, Senior Strategist
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
Oct 5, 2021
The Hang Seng Index remains firmly in the spotlight as the Evergrande drama continues to unfold. The index fell by more than 2% on Monday as fears continue to grow surrounding Evergrande’s dollar bond payments.
tastytrade content is provided solely by tastytrade, Inc. (“tastytrade”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. tastytrade, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastytrade is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. tastytrade is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options, futures and futures options are not suitable for all investors. Prior to trading securities products, please read the Characteristics and Risks of Standardized Options and the Risk Disclosure for Futures and Options found on tastyworks.com.
tastyworks, Inc. ("tastyworks") is a registered broker-dealer and member of FINRA, NFA and SIPC. tastyworks offers self-directed brokerage accounts to its customers. tastyworks does not give financial or trading advice nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastyworks’ systems, services or products. tastyworks is a wholly owned subsidiary of tastytrade, Inc (“tastytrade”). tastytrade is a trademark/servicemark owned by tastytrade.
Quiet Foundation, Inc. (“Quiet Foundation”) is a wholly-owned subsidiary of tastytrade The information on quietfoundation.com is intended for U.S. residents only. All investing involves the risk of loss. Past performance is not a guarantee of future results. Quiet Foundation does not make suitability determinations, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of Quiet Foundation’s systems, services or products.
Small Exchange, Inc. is a Designated Contract Market registered with the U.S. Commodity Futures Trading Commission. The information on this site should be considered general information and not in any case as a recommendation or advice concerning investment decisions. The reader itself is responsible for the risks associated with an investment decision based on the information stated in this material in light of his or her specific circumstances. The information on this website is for informational purposes only, and does not contend to address the financial objectives, situation, or specific needs of any individual investor. Trading in derivatives and other financial instruments involves risk, please read the Risk Disclosure Statement for Futures and Options. tastytrade is an investor in Small Exchange, Inc.