In the week ahead, markets will focus on U.S. retail sales data and GDP for clues about economic strength and its implications for Federal Reserve rate decisions. The European Central Bank is expected to deliver another 25 basis point rate cut, while China will release its Q3 growth figures. Oil prices are likely to stay volatile amid demand disruptions and ongoing geopolitical tensions. Here’s a quick look at the key events shaping the markets this week.
Key Data and Event scheduled this week – ECB Rate Decision, China GDP
US Data to watch
Markets will receive another key update on the health of the U.S. consumer on Thursday, as investors await retail sales data that could provide further insight into an economy proving to be more resilient than many had anticipated. The data is foreseen at 0.1% unchanged from the previous 0.1%.
Stronger-than-expected labor market data recently prompted investors to reassess expectations for how much the Federal Reserve will need to cut rates in the coming months. The weekly jobless claims data will weight on the currency. The data is foreseen at 241k from previous 258.
A robust retail sales report could further fuel this sentiment, offering additional evidence of strength in a critical sector of the world’s largest economy.
In addition, investors will have the opportunity to hear from several Federal Reserve officials in the coming days, including Governor Christopher Waller, Minneapolis Fed President Neel Kashkari, and San Francisco Fed President Mary Daly.
European Center Bank policy decision
The ECB is expected to deliver another quarter-point rate cut on Thursday, a move that policymakers and market watchers had largely dismissed after the bank’s last meeting in September. The ECB is widely expected to cut rate on Thursday, with over 90% of economists polled predicting a 25-basis-point reduction to 3.25% after September’s inflation dipped below 2%; most expect another 25 bps cut in December. The tone of the monetary policy statement and press conference will be key for expectations.
The main refinancing rate is expected to cut buy 3.40% from 3.65% by exporters. That could weight on the currency.
However, signs of slowing economic growth and easing inflationary pressures have heightened the need for more aggressive rate cuts to support the eurozone’s economy.
Some analysts believe that Thursday’s cut could be the start of back-to-back rate reductions.
China Macroeconomic Release
China’s third-quarter GDP data, due on Friday, will be the highlight of a busy week of economic reports from the world’s second-largest economy. The data is foreseen at 4.6% from previous 4.7%.
Despite a weak second quarter and expectations of limited improvement in the third, policymakers remain confident in meeting their annual growth target of around 5%.
Investors may look past the pessimism, buoyed by Beijing’s recent aggressive stimulus measures, which pushed mainland stocks to new highs. While some of the initial optimism has faded, additional details on fiscal support could spark another market rally.
Along with GDP, China will release data on trade, Industrial production data is foreseen at 4.6% from previous 4.5%, and retail sales at 2.5% from previous 2.1%, offering policymakers a clearer view of the challenges heading into the year’s end.
UK Release
UK retail sales data, set to be released on Friday, will be another key economic indicator to watch. The data is expected to show a decline of -0.3%, down from the previous reading of 0.1%. Such a drop could heighten expectations of a potential rate cut by the Bank of England, as signs of slowing consumer activity may add to concerns about the UK economy’s outlook.
Japan Release
Monday is a holiday in Japan. The week’s main data releases are core machinery orders on Wednesday foreseen at -0.1% from previous -0.1%, and the highlight will be September CPI inflation on Friday. The data is foreseen at 2.3% from previous 2.8% That could weight on the Yen. BOJ board member Seiji Adachi will give a speech and news conference on Wednesday. Â
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