FXStreet (Bali) – David Fritz, FX Strategist at Nomura, notes that this week, there will be more data and Fed speeches that could influence expectations for a December liftoff.
Key Quotes
“This week, there will be more data and Fed speeches that could influence expectations for a December liftoff. NFP this Friday was very strong, which pushed up the likelihood of a December rate hike, and with it the US dollar. This came after Fed speakers had reiterated that December was a live meeting and that data still mattered. Further data will be important, therefore, and upcoming speeches will indicate, based on these data, which way the Fed members are leaning.”
“This coming week, data points will include retail sales and the JOLTS report. Consumer spending has been one of the drivers of growth in the US economy this year, although retail sales surprised on the downside in September. While we are expecting a bounce back in October, sustained weakness could raise concerns about the economy. The JOLTS report will indicate the amount of “churn” in the labor market, an indicator the Fed will watch for signs of labor market health.”
“The central day for Fed speakers will be Thursday, with a set speaking at the Monetary Policy conference. In Europe, there will be the UK employment report and Euro area GDP. We expect the UK labor market report to be robust and show a decline in the unemployment rate to 5.3% on employment growth of 210k.”
“The BoE and the inflation report this past week failed to live up to expectations, and as a result, GBP stumbled. A robust labor market report may shift expectations again, with a repricing toward our expected rate hike target of May 2016, rather than late 2016/early 2017 as the market is currently pricing.”
“Some Euro area countries will release GDP data next week. Our Galileo model has shown that thus far the Euro area has been shrugging off global growth concerns), and we will look to see if the official data confirm. Whether good or bad, however, the data are unlikely to sway the ECB away from further easing at its meeting in December, which it effectively preannounced at the most recent meeting (see ECB review, 22 October 2015).”
“Given the concerns about growth in China, the market focus has naturally been tuned a little more toward Chinese data. We expect industrial production growth of 5.7% y-o-y, unchanged from September, given signs of stabilization at low levels from leading indicators (including PMIs, the MNI business sentiment index, and our proprietary China indices.)”
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