Next week’s main event will be the ECB meeting. Further, US, China and India Inflation number also will release which will have a strong impact on the market.
Important Data and Event to watch : China and US Inflation
China Inflation
In China, attention will be on Monday’s CPI data. We expect headline inflation to rise to 0.7% y/y from 0.5% in July, while core inflation is likely to remain subdued.
August trade data will be released on Tuesday, and it will be interesting to see whether China’s exports continue to reflect the ongoing weakness in global manufacturing.
On the political front
Kamala Harris and Donald Trump will have their first live debate on Tuesday evening, US time. For more insights, check out our first US Election Monitor. As of 6 September, the latest data shows Harris holding a narrow lead.
US Inflation
Another key data point will be the US August CPI, set to be released on Wednesday. We forecast headline inflation to ease to +0.1% m/m SA (2.5% y/y), while core inflation is expected to remain steady at +0.2% m/m SA (3.2% y/y).
ECB POLICY MEET
ECB policy meet will take place on Thursday, where a 25bp cut now seems like a done deal. Wage growth in euro area declined significantly in the second quarter to 4.3% y/y from 4.8% y/y in Q1, measured by the ECB’s closely watched compensation per employee measure.
Hence, despite service inflation remaining high for now, ECB can be more confident that underlying price pressures are abating, and inflation will return to target. But even so, weak productivity and labour force growth suggest that euro area’s potential growth remains weak.
At roughly similar growth rates, the euro area is more prone to overheating and re-emerging inflationary pressures compared to the US.
Happy trading!
Commodity Samachar Securities
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