Week Ahead

The Fed’s monetary policy meeting will be keenly watched next week with all eyes on Chair Powell’s press conference for hints on new stimulus measures and details on the new average inflation target. On the data front, industrial production, retail sales, building permits and housing starts will also be in the spotlight. Elsewhere, the BoE and the BoJ will announce their interest rate decision, China will release industrial production, retail sales and fixed investment figures and the ruling Liberal Democratic Party in Japan will hold its leadership election with the new party’s leader almost certainly becoming premier, replacing Shinzo Abe.

In the US, the Federal Reserve is seen holding the target range for the federal funds rate steady at 0-0.25 percent at the end of their two-day meeting on Wednesday while keeping its dovish tone. Still, investors will follow Chair Jerome Powell’s press conference for further details about the possibility of additional stimulus, any hints on how to implement the new average inflation target and clarification about the purchases of Treasury and mortgage-backed securities. The Fed will also release fresh economic and interest rate projections, including forecasts for 2023 for the first time. On the economic data front, retail sales and industrial production numbers for August are seen pointing to a slowdown in activity amid a resurgence in COVID-19 cases. In addition, the preliminary reading of Michigan consumer sentiment for September will likely show a slight improvement in morale. Other important publications are building permits and housing starts, foreign trade prices, NY Empire State Manufacturing Index, Philadelphia Fed Manufacturing Index, NAHB Housing Market Index, business inventories, second-quarter current account and overall net capital flows.

Elsewhere in America, key data to follow include Canada inflation rate, retail trade, and manufacturing and wholesale sales. The central bank of Brazil will be deciding on interest rates when it meets on Wednesday.

In the UK, the Bank of England will decide on monetary policy, but no changes are expected, as the country faces greater instability amid a no-deal Brexit concerns and as economic data pointed to a slow recovery from the pandemic. Figures from the ONS are expected to show an increase in the unemployment rate to the highest level in over one and a half years amid the coronavirus pandemic, while wages should fall the most since 2009. The country’s inflation figures, alongside retail trade, producer prices and retail price index will also be in the spotlight.

Elsewhere in Europe, the Eurozone will release final estimates of August’s consumer prices, with earlier estimates pointing to the first decline since May 2016; and Germany ZEW Indicator of Economic Sentiment will most likely drop from a 16-year high hit in August. Other key data include: Eurozone balance of trade, industrial production and construction output; Germany producer prices; Switzerland foreign trade and producer and import prices; and Turkey industrial activity and retail sales. Also, the Central Bank of Russia and the National Bank of Poland will be deciding on monetary policy.

China will be releasing industrial production, fixed asset investment, retail sales and unemployment rate. Meanwhile, the Bank of Japan will be deciding on monetary policy, but no changes are expected. On the economic data front, important releases include July’s final reading of industrial production consumer inflation rate and trade balance. Also in Japan, the ruling Liberal Democratic Party will hold its leadership election on Monday and the chief cabinet secretary and government spokesman Yoshihide Suga remains the favourite in the race. The new party’s leader will almost certainly become premier, replacing Shinzo Abe.

The Reserve Bank of Australia will be publishing the minutes of its last monetary policy meeting. Elsewhere, investors will be waiting for employment figures, Westpac leading index, house price index and HIA mew home sales. Meanwhile, traders in India will focus on consumer and wholesale prices and trade balance.

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