Key Economic Events to Watch: U.S. PCE Inflation Data and Australia's Rate Decision
As we approach the week starting September 23, several significant global economic events are poised to impact foreign exchange (FX) and bond markets. Following the U.S. Federal Reserve's substantial interest rate cut of 50 basis points, all eyes are now on the upcoming economic data, particularly the Personal Consumption Expenditures (PCE) inflation figures, which will provide insights into the pace of future rate reductions.
In Europe, the provisional purchasing managers' index (PMI) data for both the eurozone and the United Kingdom will be under scrutiny, alongside a crucial rate decision from the Swiss National Bank. Meanwhile, in Asia, the Reserve Bank of Australia (RBA) is set to meet just ahead of key inflation data releases. Japan will also report its inflation figures, while China will unveil its industrial profit data.
The Federal Reserve's recent decision to cut interest rates marks a significant shift in monetary policy, with analysts anticipating two additional rate cuts in November and December. Market expectations are leaning towards the possibility of another substantial 50 basis-point cut. However, Fed Chair Jerome Powell has emphasized that the central bank will remain responsive to incoming economic data, indicating that more aggressive moves may be necessary if conditions warrant.
This week's highlight will be the U.S. PCE inflation data for August, which is closely monitored as the Fed's preferred inflation measure. Analysts from SEB suggest that this data will likely reinforce the notion that inflation is under control. Additionally, the third estimate of U.S. second-quarter GDP will be released on Thursday, along with the University of Michigan's final consumer survey for September on Friday.
Other important data releases include the S&P preliminary PMI data for manufacturing and services on Monday and the Conference Board's consumer confidence index on Tuesday. Given the Fed's keen interest in the labor market, Thursday's weekly jobless claims figures will also be significant.
In Canada, GDP data for July is expected on Friday, potentially buoyed by stronger-than-anticipated retail sales figures. However, the Canadian economy has shown signs of weakness, and recent Bank of Canada minutes indicate a willingness to accelerate rate cuts if labor market conditions do not improve.
Mexico's central bank will announce its rate decision on Thursday, with analysts predicting a 25 basis-point cut. In the eurozone, the provisional PMI surveys for September will be closely watched amid speculation regarding potential interest rate cuts by the European Central Bank (ECB) in October.
The ECB's focus remains solely on inflation, contrasting with the dual mandate of the U.S. Fed. French and Spanish consumer price inflation figures for September will be particularly significant, as they may provide early insights into aggregate eurozone inflation trends.
In the U.K., provisional PMI surveys will shed light on manufacturing and services sector activity, with expectations of steady growth in manufacturing but a slower pace in services due to upcoming government budget considerations.
Sweden's Riksbank is expected to announce a 25 basis-point rate cut on Wednesday, with analysts noting the risk of a larger cut given the current economic climate. The Swiss National Bank is also anticipated to reduce its key policy rate by 25 basis points.
Overall, the upcoming week is packed with critical economic indicators and central bank decisions that will shape market expectations and influence monetary policy trajectories across various regions.