Week Ahead: US Retail Sales, UK CPI Data Enter Spotlight
XM Group | Oct 13, 2023 04:51AM ET
- After US CPIs, US retail sales may also impact Fed hike expectations
- Will the UK inflation numbers increase the chances for another BoE hike?
- Aussie and Kiwi traders await Australia jobs report and New Zealand’s CPI
- China’s GDP could also impact those commodity-linked currencies Will retail sales allow the dollar to extend its recovery?
The dollar traded on the back foot for the better half of this week due to dovish remarks by Fed officials who suggested that the surge in Treasury yields since they last met has done the work for them, implying that another hike before the end of the year may not be needed.
However, Thursday’s CPIs revealed that headline inflation held steady at 3.7% y/y, instead of slowing to 3.6% as expected, encouraging market participants to bring rate hike bets back to the table. From 28%, the probability for a final quarter-point rate increment increased to around 40%, while the rate reductions penciled in for next year have been reduced by around 10bps. This helped the dollar rebound.
As they try to further clear the fog, investors are likely to keep their gaze locked on more Fed speeches next week, with several officials scheduled to step onto the rostrum. It will be interesting to hear what they have to say in the aftermath of the inflation numbers.
That said, although their view on interest rates may be a priority for market participants, economic data may also be closely monitored for updated indications on how the world’s largest economic powerhouse has been faring.
On Tuesday, headline and core retail sales for September are forecast to have slowed to 0.2% m/m and 0.1% m/m respectively after both growing by 0.6% in August, while industrial production is also expected to have decelerated. On Thursday, although housing starts are seen increasing, the more forward-looking building permits are forecast to have slid, while on Friday, existing home sales are expected to have declined, suggesting that the housing market continues to cool down.
Earnings season kicks off
In the equity arena, the earnings season is kicking off today with results from major US banks, while on Wednesday, Tesla (NASDAQ:TSLA) and Netflix (NASDAQ:NFLX) will make their numbers public after the closing bell.
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