Week Ahead

The calendar in the US will be dominated by inflation rate figures which should provide further clues on the Fed’s tightening path. Other important releases include retail sales and the University of Michigan sentiment index. Investors will be also closely watching the UK inflation rate and monthly GDP figures. Finally, China will be releasing industrial production, retail sales, and investment growth data for August.

The US August inflation report will be the most closely watched event. The annual inflation rate is seen slowing to 8.1% from 8.5% while the monthly consumer price index may fall by 0.1%, the first decline since May 2020. Still, core inflation likely rose 0.3% over the previous month, pushing the annual rate to 6.0% from 5.9%. Investors will also keep a close on US retail sales data for clues about the behavior of American consumers on the back of sky-high inflation. Other important releases in the US calendar include the producer price index and the University of Michigan sentiment index. Elsewhere in America, it will be interesting to follow retail sales and business confidence figures from Brazil.

In the United Kingdom, the economic calendar is packed with key updates on unemployment and wage growth, alongside inflation data, retail trade and monthly GDP data. Britain’s inflation rate is expected to advance slightly further to 10.2% hit in August, the highest in over 40 years. Also, retail sales likely rebounded further in July. Meanwhile, The Bank of England postponed next week’s interest rate decision following the death of Queen Elizabeth.

Elsewhere in Europe, final estimates of August’s inflation will be released for the Euro Area, including Germany, France, Italy and Spain while several small European countries will publish preliminary data. At the same time, the German Zew economic sentiment index is set to take another hit after Russia halted natural gas flows. On Friday, the Central Bank of Russia is likely to slash borrowing costs by 50 bps, the sixth consecutive rate cut as inflation continues to ease. Other data to follow include Euro Area foreign trade and industrial output; Germany wholesale prices; and Turkey unemployment rate and industrial activity.

In Australia, the unemployment rate is expected to have remained at a record low of 3.4% in August. Business and consumer confidence for September will also be keenly followed. In neighboring New Zealand, Q2 GDP data is set to point to a slight rebound in the Kiwi economy on the quarter.

In Asia, investors will be closely follow Chinese releases including industrial production, retail sales, unemployment, and investment growth data for August for further clues on how the world’s second largest economy was impacted by power rationing and Covid lockdowns. In Japan, a weak yen and soaring energy costs are expected to lift the country’s trade deficit to near record highs. Other fresh releases from Japan include machinery orders and the second print of industrial output for July. Elsewhere, the inflation rate in India is set to rise for the first time in three months, while industrial output for July and August trade data are also eyed. Lastly, South Korea and Singapore are set to publish unemployment figures.