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Week Ahead - Central Banks headline bumper week

George Walker, Friday, 11 September 2020

MKT-6937_WA-CentralBanks_blog

There’s an absolutely packed week ahead with no less than three major central banks announcing their latest interest rate decisions, including the US and UK. With the Fed recently deciding to switch to an average inflationary target, will we see any surprise updates to US monetary policy? Away from interest rate decisions, we also have unemployment and inflation data from some of the major world economies.

It’s one not to miss this week! Here’s what to watch out for in the markets.

A very busy week ahead starts on a relatively quiet note on Monday with the only notable data coming in the form of Industrial Production figures from Japan in the early morning and then the eurozone shortly after the markets open. Industrial Production figures show an indication into the volume of production from factories and manufacturing sectors so a positive number could signal an economic recovery.

As we head into Tuesday, we have minutes from the latest Reserve Bank of Australia meeting overnight. The results of these minutes we already know from their last interest rate decision however there could be subtle changes in the wording which could cause volatility in the AUD. We also get Industrial Production and Retail Sales data from China in the very early hours of the morning.

An hour ahead of the European markets open we get the Unemployment Rate out of the UK followed shortly after by ZEW Surveys from the eurozone and Germany which is a measure of institutional investor sentiment. Industrial Production data from the US brings Tuesday’s data to a close with only API Weekly Crude Oil Stock numbers to be released later in the evening.

The steady recovery in the oil price was dealt a bit of a shock last week as a 14% decline saw it trade at levels not seen since June. The decline came as investor sentiment turned negative on demand concerns. Storage levels show the opposite side to that and reflect supply so the API Weekly Crude Oil Stock released on Tuesday at 21:30 and the EIA Crude Oil Stocks Change at 15:30 on Wednesday afternoon could see further volatility in the price of oil.

During the morning and afternoon on Wednesday we get high impact Consumer Price Index (CPI) inflation data out from the UK and Canada which could see a reaction in the relating currencies throughout the trading day.

US Federal Reserve interest rate decision

Possibly the main event of the week will be the Interest Rate decision, Monetary Policy Statement and Press conference from the Federal Reserve in the US.

According to the latest polls, there are no expectations for the Fed to change its current interest rate from the 0.25% level it has maintained since March. Recent comments stating a revised inflation target of 2% over time and ‘broad-based and inclusive’ gains expected in the jobs market left the door open for further monetary policy easing should the US economy require it to do so during the pandemic. Could we see any surprises in the all-important press conference shortly after the initial announcement?

Gross Domestic Product data also hits the wires from New Zealand before the turn of midnight.

Australian employment data is released overnight into Thursday ahead of two central banks set to announce their latest stance on interest rates.

Bank of Japan interest rate decision

First up we have the Bank of Japan. Japan’s economy has been in an extremely severe situation with the impact of the global pandemic but did mention that they expect a gradual recovery in 2020 with the pace of recovery increasing during 2021/2022. The BoJ has had to tackle the pandemic with interest rates almost at zero before the downturn this year. They have resorted to adding liquidity into markets and the financial system. With expectations low that there will be further interest rate cuts, is the BoJ doing enough or will they be forced into taking further measures?

Eurozone Consumer Price Index inflation data precedes the announcement from the second central bank of the day.

Bank of England interest rate decision

As we hit midday in the UK, all eyes will be on the Bank of England and their interest rate decision. The BoE has a very difficult period ahead as they try to limit the damage of the UK lockdown and position the economy as best as possible for a strong recovery. The UK has been one of the hardest hit economies as a result of the coronavirus pandemic and the central bank has had to take dramatic measures to prevent an economic meltdown. Expectations are that there will be no change to the interest rates, however traders will be focused on the accompanying statement to try and spot subtle changes in language used to determine whether there will be more stimulus on the cards in the near future.

With the recent comments from the Federal Reserve wanting to see a recovery in the US Jobs market, Initial and continuing jobless claims could cause heightened volatility in the USD during the afternoon on Thursday.

As markets digest the big week of data and central bank updates, Friday is light on high-impact data as we get Japanese Consumer Price index data overnight and Retail Sales from the UK and Canada throughout the day.

With no less than three of the most influential central banks updating the markets in the coming week, traders will need to be mindful of exposure to currencies and equity markets as we can see large spikes when they hit the wires.

All times indicated are BST.


ECONOMIC CALENDAR (all times are BST)

Monday, 14 September

05:30 JPY Industrial Production
05:30 JPY Capacity Utilisation
05:30 JPY Tertiary Index
10:00 EUR Industrial Production
22:00 NZD REINZ House Price Index
23:00 NZD Westpac Consumer Survey

UK Company Announcements:

N/A

US Company Announcements:

N/A

Tuesday, 15 September

02:30 AUD RBA Meeting Minutes
02:30 AUD House Price Index
03:00 CNY NBS Press Conference
03:00 CNY Fixed Asset Investment
03:00 CNY Industrial Production
03:00 CNY Retail Sales
07:00 GBP ILO Unemployment Rate
07:00 GBP Claimant Count
07:00 GBP Claimant Count Change
07:00 GBP Average Earnings Including Bonus
07:00 GBP Average Earnings Excluding Bonus
07:30 CHF Producer and Import Prices
10:00 EUR ZEW Survey – Economic Sentiment
10:00 EUR Labour Cost
10:00 GER ZEW Survey – Current Situation
10:00 GER ZEW Survey – Economic Sentiment
13:30 USD NY Empire State Manufacturing Index
13:30 USD Import Price Index
13:30 USD Export Price Index
13:30 CAD Manufacturing Sales
13:55 USD Redbook Index
14:15 USD Industrial Production
14:15 USD Capacity Utilisation
21:30 USD API Weekly Crude Oil Stock

UK Company Announcements:

Ocado

US Company Announcements:

Adobe Inc

FedEx Corporation

Wednesday, 16 September

00:50 JPY Imports
00:50 JPY Exports
00:50 JPY Merchandise Trade Balance Total
00:50 JPY Adjusted Merchandise Trade Balance
01:30 AUD Westpac Leading Index
02:00 AUD HIA New Home Sales
07:00 GBP Consumer Price Index
07:00 GBP Core Consumer Price Index
07:00 GBP Retail Price Index
07:00 GBP Producer Price Index
07:00 GBP Producer Price Index – Input
07:00 GBP Producer Price Index – Output
07:00 GBP PPI Core Output
10:00 EUR Trade Balance
13:30 USD Retail Sales
13:30 USD Retail Sales ex Autos
13:30 USD Retail Sales Control Group
13:30 CAD Consumer Price Index
13:30 CAD Consumer Price Index – Core
13:30 CAD BoC Consumer Price Index Core
15:00 USD Business Inventories
15:30 USD EIA Crude Oil Stocks Change
19:00 USD Fed Interest Rate Decision
19:00 USD Fed’s Monetary Policy Statement
19:00 USD FOMC Economic Projections
19:30 USD FOMC Press Conference
23:45 NZD Gross Domestic Product

UK Company Announcements:

N/A

US Company Announcements:

N/A

Thursday, 17 September

02:30 AUD Unemployment Rate
02:30 AUD Employment Change
02:30 AUD Full Time Employment
02:30 AUD Part-Time Employment
02:30 AUD Participation Rate
02:30 AUD RBA Bulletin
04:00 JPY BoJ Interest Rate Decision
04:00 JPY BoJ Monetary Policy Statement
07:00 JPY BoJ Press Conference
07:00 CHF Imports
07:00 CHF Exports
07:00 CHF Trade Balance
10:00 EUR Consumer Price Index
10:00 EUR Consumer Price Index – Core
10:00 EUR Construction Output
12:00 GBP BoE Interest Rate Decision
12:00 GBP Monetary Policy Statement
12:00 GBP Bank of England Minutes
12:00 GBP BoE MPC Vote Hike
12:00 GBP BoE MPC Vote Cut
12:00 GBP BoE MPC Vote Unchanged
12:00 GBP BoE Asset Purchase Facility
13:30 USD Building Permits
13:30 USD Housing Starts
13:30 USD Philadelphia Fed Manufacturing Survey
13:30 USD Initial Jobless Claims
13:30 USD Continuing Jobless Claims
13:30 CAD ADP Employment Change
15:30 USD EIA Natural Gas Storage Change

UK Company Announcements:

Next

Oxford Biomedica

Playtech

US Company Announcements:

N/A

Friday, 18 September

00:30 JPY National Consumer Price Index
00:30 JPY National CPI ex-Fresh Food
00:30 JPY National CPI ex Food, Energy
07:00 GBP Retail Sales
07:00 GBP Retail Sales ex-Fuel
09:00 EUR Current Account
12:00 GBP BoE Quarterly Bulletin
13:30 CAD Retail Sales
13:30 CAD Retail Sales ex Autos
15:00 USD Michigan Consumer Sentiment Index Preliminary
18:00 USD Baker Hughes US Oil Rig Count

UK Company Announcements:

N/A

US Company Announcements:

N/A

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