Week Ahead – Fed minutes and Eurozone PMIs on the menu

 | Nov 17, 2023 07:01AM ET

    • Fed minutes on Tuesday will be scrutinized for clues on rate path
    • Eurozone business surveys to shed some light on recession risks
    • Japanese inflation stats also in focus as yen attempts to recover
  • Bruised dollar awaits FOMC minutes

    It’s been a tough month for the US dollar. A string of disappointing data releases coupled with an announcement that the Treasury will shift its debt issuance towards shorter-dated maturities came together to engineer a heavy decline in US bond yields, which in turn has reduced the dollar’s interest rate advantage.

    On the macro front, the labor market finally seems to be loosening. The unemployment rate has been grinding higher for several months now, providing some relief to Fed officials, as weaker employment conditions often translate into cooler inflation. Indeed, core inflation has declined steadily this year, but it remains elevated at 4%, so the Fed cannot declare victory yet.

    Whether that happens or not will depend on the inflation outlook, which raises the importance of the upcoming data. Forecasts suggest that core inflation accelerated in October, something corroborated by a similar acceleration in Tokyo’s inflation that is considered a leading indicator of nationwide inflation. If this is the case, it could help the battered yen to recover some ground.

    Meanwhile, inflation data will also be released in Canada on Tuesday, ahead of the latest edition of retail sales on Friday. Finally in Australia, the minutes of the latest RBA meeting are due out on Tuesday.

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