It was predicted last week that the developments in the tax-reforms will have a major impact on the dollar index. The CPI for the month of October was predicted to stand at 0.1% based on the regression analysis model. During the week, the retail sales for the month of October slowed to 0.2% which was better than the expectations but was quite weaker as compared to the previous month’s rise of 1.9%. The Consumer price growth too slowed to 0.1% but the price pressure accelerated to 0.2% excluding food and energy costs. Lastly, the House was successful in passing its version of the tax-reform bill.
In the week ahead, Fed Chair, Janet Yellen is scheduled to speak at Stern Business School on Wednesday. In addition, the meeting minutes from the latest FOMC meeting is to be released on Wednesday. Although the meeting did a little to move the probability of a December rate hike and was uneventful, the minutes are expected to show some discussion amongst the policymakers and fed staff about how the Balance Sheet normalization programe is proceeding so far.
Owing to the fact that there won’t be any activity involving tax reforms owing to the holiday-shortened week in Washington and the US Senate is expected to pick up the issue next week when it returns to the Capital.
It was predicted last week that the recent comments from the officials of the European Central Bank have been less pessimistic and the latest economic report shows that the Eurozone economy is still performing quite well which would provide strength to the pair. During the week, the GDP from Germany showed that the economy was growing at a pace of 0.8% QoQ against the market expectations of 0.6%.
Moreover, the president of ECB, Draghi during his public appearance alongside the Central Bank’s head of BoJ, BoE, and Fed stated that he has increasing confidence that the economic expansion is solid. Lastly, the headline inflation was released at 1.4% in line with the expectations and the core also dropped to 0.9% as expected.
In the week ahead, Mario Draghi is expected to testify in front of the European MPs in Brussels and is expected to bring forward the updated view on the inflation situation and euro-zone economies on Monday.
In addition, ECB following its last month’s announcement of extending the QE program by 9 months or beyond if required at EUR 30 bln per month is expected to release the minutes from the meeting on Friday. The market is expected to look forward to any indication regarding the split on the governing council ahead of the announcement. Considering that the ECB sources have revealed that Weidmann, Villeroy, Hansson, Coeure, Lauteschlaeger and Knot were in favor to set a specified date to end the Asset purchase program, there isn’t much to add on this front.
It was predicted last week that the Japanese GDP would observe an uptick as the latest Tankan Survey from BoJ pointed towards the persistence of a strong economic activity which is driven by global economic recovery and firm exports and the same was observed.
In addition, BoJ Governor, Kuroda stated during the week that the inflation expectations in Japan were slightly picking up and also stated that the central bank would continue with its strong accommodative policy.
In the week ahead, there is no tier-one data release from Japan and the pair is expected to be dominated by the events in the US.
It was predicted last week that the headline inflation is expected to ease to 1.4% YoY from the previous release of 1.6% and the same was observed. The other data release has shown that the house prices, existing home sales and consumer price growth has slowed. This supports the cautious monetary outlook by BoC adding strength in the pair.
In addition, some strength in CAD was seen owing to the steadiness in the oil prices on the back of crisis in Saudi Arabia.
In the week ahead, Canada is scheduled to release its Retail sales data for the month of September which is expected to observe a growth of 0.9% compared to a fall of 0.3% in the previous release. Moreover, there were no meaningful resulted from the NAFTA meeting last week and is scheduled to continue to Tuesday.
It was predicted last week that headline will observe a rise to 3.1% YoY and the core CPI to come in at 2.8% YoY against the previous release of 2.7%. However, the headline CPI was announced lower at 3% YoY as cheaper fuel was able to offset the rising cost of food and the core CPI was seen at 2.7%.
The wage growth was observed steady at 2.2%, but it was below the rate of inflation which meant a fall in the purchasing power of the consumer and this could have a negative impact on the economy owing to a weaker consumer spending.
Lastly, the retail sales observed a gain of 0.3% in the month of October but the same was not good for the UK economy as the retail sales declined at an annualized rate of 0.3% which was the first YoY fall since 2013.
In the week ahead, EU ministers are scheduled to meet on Monday to assess the Brexit negotiations and the plausibility of progress in December. Brussels-based ambassadors are scheduled to meet on Wednesday to discuss internal preparations for any potential transition agreement.
In addition, UK Chancellor Hammond is to present his Autumn Budget on Wednesday. The key release in terms of economic data is the second reading of Q3 GDP on Thursday. It is expected that the YoY and QoQ GDP will remain unchanged at 1.5% and 0.4% respectively. This release is expected to provide an insight into the Q3 expenditure breakdown which will provide a view as to how the consumer spending is holding up against high inflation.
It was predicted last week that the pair will be weighed upon by the cut in the inflation outlook in the RBA’s recent Statement of a Monetary policy wherein they observe the inflation to not meet the 2% target by 2019.
During the week, even though the total job growth fell below the market expectations, the rise in the full-time employment drove the rate of unemployment down towards its lowest levels in the 4 years at 5.4%. However, the consumer inflation expectations fell to 3.7% and the wage growth stagnated at 0.5% for Q3.
In the week ahead, the focus will be on the release of the minutes from the recent RBA meeting which is expected to release on Tuesday. It is expected that RBA will maintain the similar outlook, but the market will be looking ahead to any discussion about the softer inflation outlook.
Moreover, RBA Governor Philip Lowe is scheduled to speak at a dinner event on Tuesday, with the topic of the discussion being ''recent developments in the Australian and global economy”.
It was predicted last week that with no major economic data, the pair will be driven by the developments in the US tax-reforms bill and the economic releases from the US. During the week, the retail sales data from the US for the month of October slowed to 0.2% which was better than the expectations but was quite weaker as compared to the previous month’s rise of 1.9%. The Consumer price growth too slowed to 0.1% but the price pressure accelerated to 0.2% excluding food and energy costs. Lastly, the House was successful in passing its version of the tax-reform bill.
In the week ahead, Swiss National Bank Chairman Thomas Jordan is expected to speak on “Switzerland’s high current account surplus: consequences for the SNB’s monetary policy??” at the University of Basel on Thursday. In addition, Switzerland is expected to release its Industrial Production data for Q3 on Friday.
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