Events to Look Out for Next Week

• IFO Business Climate, Assessment & Expectations (EUR, GMT 08:00) – The German IFO business reading is expected to decline slightly to 97.8 in October from 98.8.

Tuesday – 26 October 2021

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• Consumer Confidence (USD, GMT 14:00) – The US Consumer Confidence is expected to dip to 109.0 after a drop to a 7-month low of 109.3 in September. The expectations index is expected to edge down to 86.0 from a 10-month low of 86.6 in September. The confidence updraft with stimulus and vaccines has dissipated since April, and nearly all the major confidence measures have fallen since June.

Wednesday – 27 October 2021

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• Consumer Price Index (AUD, GMT 00:30) – Australian inflation for Q3  is seen lower at 0.7% q/q while headline and trimmed mean are expected steady at 3.8% y/y and 0.5% q/q respectively.
• Durable Goods (USD, GMT 12:30) – Durable goods orders are expected to fall -1.1% in September with a -4.5% drop for transportation orders, after a 1.8% headline bounce in August that included a 5.4% transportation orders increase. Durable orders ex-transportation is pegged to rise 0.4%, after a 0.3% August increase.
• Interest Rate Decision, Statement and Conference (CAD, GMT 14:00) –The Bank of Canada (BoC) became the first major central bank to reduce the quantity of QE last April from C$4 billion to C$3 billion, followed by a second reduction in July to C $2 billion. Canada’s current economic situation is now in good shape with the unemployment rate having dropped to 6.9% in September followed by 157 thousand new jobs for the same month. Inflation is currently at a high of 4.4% (CPI y/y) up from 4.1%, it is much higher than the BoC’s 2.0% projection but the BoC has stressed that this high state of inflation is temporary in nature and will decline again in the near future. Canada’s GDP also performed well. Hence BoC is expected to once again cut its QE allocation to C $1 billion at its policy meeting.

Thursday – 28 October 2021

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• Interest Rate Decision, Monetary Policy Statement & Outlook Report (JPY, GMT N/A) – The Bank will publish its latest quarterly growth and price forecasts alongside its statement after the meeting, which is expected to present downgrades,  due to slumping Japanese exports and output but also downgrade to consumer inflation forecasts. From policy perspective, the BoJ is expected to leave rates and asset purchases unchanged.
• Interest Rate Decision and Press Conference (EUR, GMT 11:45 & 13:30)  – ECB policymakers have been eager to push back against rate hike speculation. while are still doing their best to keep inflation concerns and tapering fears at bay, by continuing to highlight the transitory factors that are driving headline inflation rates higher. There is still however an ongoing debate on PEPP and the future of the ECB’s old asset purchase programs. The final decision on that has been postponed until the December meeting and until then central bankers can do little more than to try and keep markets calm. That PEPP will end on time in March next year is pretty certain now and while some central bankers stress the need to maintain flexibility on purchases beyond the emergency program, it will be difficult to get past the no-bailout clause permanently, although the central bank may stress that PEPP can be revised if necessary to prevent an “unduly” widening of spreads as the focus returns to deficit and debt levels once the crisis is over. As a permanent boost to the older APP programs, higher limits on EU debt may be the immediate solution.
• Gross Domestic Product (USD, GMT 12:30) – A growth is expected in Q3 GDP of 3.0%, as supply chain bottlenecks sharply curtailed activity in Q3 despite the massive stimulus spending that fueled solid gains of 6.3% in Q1 and 6.7% in Q2. A vehicle shortage capped consumption growth, which we peg at just 2.1% in Q3, while residential investment likely posted another drop in Q3, this time of an estimated -1.6%, thanks to shortages of building materials.

Friday – 29 October 2021

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• Retail Sales (AUD, GMT 00:30) – Retail Sales for September are expected to dip to -2.5% m/m from -1.7% last time.
• Gross Domestic Product (EUR, GMT 07:00) – German Q3 GDP is expected to grow at 2.2% q/q while headline is see lower at 9.6% y/y from 9.8% y/y last month.
• Consumer Price Index and Core (EUR, GMT 09:00) – On the inflation front, HICP inflation in September didn’t hold any surprises and confirmed the headline rate at a whopping 4.1% y/y, more than twice the ECB’s upper limit for price stability. So far data remains largely impacted by energy prices and household energy cost 7.5% more than in September last year – petrol prices were 28.4% more expensive. Base effects are partly to blame, but with natural gas in short supply across Europe and indeed, the global energy market likely to remain constraint, the risk is that energy prices will remain elevated for a while. With supply chain constraints likely to persist for a while, any further pick up in demand means that the risks to the medium term inflation outlook are increasingly tilted to the upside.
• Gross Domestic Product (CAD, GMT 12:30) – The Canada GDP is anticipated to fell -0.2% in August, after it fell -1.1% in Q2.
• Personal Income/Consumption (USD, GMT 12:30) – A 0.3% rise is anticipated for September personal income rise after the 0.2% August increase, with a big 1.4% September rise in compensation after a 0.4% August gain.