Events to Look Out for Next Week

Andria Pichidi

October 28, 2022

After a massive earnings week, central banks are taking over the stage, with RBA, BoE and FED monetary policy decisions. Although Truss stepped down there is still pressure on the BOE to deliver a bumper hike in November. The 32-year high inflation in Australia also rekindled concerns for heftier rate hikes from RBA, while Fed is expected to proceed with another 75 bps tightening. With Dollar having its sharpest correct for 2022, Fed and NFP will dominate the sentiment next week.

Have a look at the most important events of the coming days in our usual weekly publication.

Manufacturing PMI (CNY, GMT 01:30) – The October Manufacturing PMI in China is expected at 49.6 from 50.1.
Gross Domestic Product (EUR, GMT 10:00) – The October prelim. GDP and CPI is expected to grow by 0.7% q/q from 0.8% q/q.

Tuesday – 01 November 2022

Interest Rate Decision, Statement and Conference (AUD, GMT 03:30) – This week Australia inflation accelerated to a 32 year high in the third quarter. Consumer prices rose 1.8% q/q, bringing the annual rate to 7.3% – the highest reading since 1990. Backed then the RBA hiked aggressively and contributed to a slide of the economy into recession and with core inflation hitting a series high of 6.3%, the data rekindled concern that the RBA will not just continue, but accelerate its tightening path again, after slowing down the pace at the last meeting. The bank has already lifted rates by 250 basis points since May. In the next meeting, however, economists are divided with regard to the amount of rate hike as forecasts are ranging between 15-50 bps.
ISM Manufacturing PMI (USD, GMT 14:00) – The ISM Manufacturing PMI for October is expected to fall to a 2-year low of 50.5 from prior low of 50.9 in September, versus an 18-year high of 63.7 in March ’21, an 11-year low of 41.6 in April of 2020, and an all-time low of 30.3 in June of 1980.
Labour Market Data (NZD, GMT 21:45) – New Zealand’s Q3 employment change is anticipated to grow by 0.4% from 0.1%.

Wednesday – 02 November 2022

Event of the Week – Interest Rate Decision & Statement & Press Conference (USD, GMT 18:00) – Fed funds futures remain priced for another 75 bp tightening at the upcoming meeting. But the market is pricing out further jumbo hikes after some Fedspeak talking about a less aggressive trajectory in December and beyond. The futures had priced in a 5% handle on the funds rate by March and extending into the summer, but it’s now the case the implied rate is back with a 4 handle and a 4.93% terminal rate in May with cuts in the fall. The forecasts suggest 75 bp increases in November and December, but a downshift to 50 bps at the January 31/February 1 policy meeting, followed by a pause to assess conditions.

Thursday – 03 November 2022

Event of the Week – Interest Rate Decision, Statement and Conference (GBP, GMT 12:00) – The pressure on the BoE has been reduced by the removal of Truss and Kwarteng and their plans of unfunded tax cuts. It is still expected that BOE will proceed with a 75 basis point hike in November, but there doesn’t seem to be the need to go even bigger. The fine tuning of the bank’s rate path will have to wait until the fiscal projections are finally on the table. BoE Deputy Governor Ramsden told a House of Commons committee that “febrile” markets want clarity on UK fiscal policy, and investors are not the only ones. Meanwhile, the BoE helped to stabilize sentiment by announcing last week that it would exclude longer-dated debt from bond sales when it starts to reduce its asset holding next month.
ISM Non-Manufacturing PMI (USD, GMT 14:00) – The ISM-NMI index should tick-down to 56.5 from 56.7 in September, versus a 2-year low of 55.3 in June that was last seen in February of 2021, and an all-time high of 68.4 last November, an 11-year low of 41.8 in April of 2020, and an all-time low of 37.8 in November 2008.

Friday – 04 November 2022

ECB President Lagarde Speech (EUR, GMT 09:30)
Event of the Week – Non-Farm Payrolls (USD, GMT 12:30) – A 200k October nonfarm payroll increase is anticipated, after gains of 263k in September, 315k in August, and 537k in July. Payroll growth should slow into year-end as mortgage rates rise and recession fears mount. The October climb in initial and continuing claims suggests some downside payroll risk for the month. The jobless rate should hold steady at the 3.5% cycle-low. Hours-worked are assumed to be flat after the 0.2% September rise, while the workweek holds at 34.5 for a fifth month. Average hourly earnings are assumed to rise 0.3%, the same as in September and August, while the y/y wage gain should dip to 4.7% from 5.0%. The ensuing strength in wage gains has allowed continued robust y/y increases into 2022, though the return of low-paid workers to the workforce is likely restraining wage increases.
Labour Market Data (CAD, GMT 12:30) – Canada’s employment change is anticipated to grow by 20k in October from -21.1k last month.

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Andria Pichidi

Market Analyst

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