25thOctober 2023
Wednesday
Wednesday, October 25th, 2023,is expected to be a bustling day in the financial markets, with severalsignificant news announcements on the horizon. Australia will unveil itsConsumer Price Index (CPI), Germany is set to release its German Ifo BusinessClimate data, while Canada is scheduled to announce its Overnight Rate, alongwith the Bank of Canada's (BOC) Monetary Policy Report, BOC Rate Statement, anda subsequent BOC Press Conference following the announcement.
AUD - CPI q/q
The Consumer Price Index (CPI) is closely monitored because of its significant influence on consumer prices, a major component of overall inflation. This emphasis on inflation is crucial for currency valuation, as central banks frequently raise interest rates in response to price increases to maintain effective inflation control. The complex relationship between CPI and monetary policy plays a pivotal role in the financial realm.
Australia's consumer prices had risen by 0.8% quarter-on-quarter in the second quarter of 2023, showing a deceleration from the 1.4% increase in the prior period and falling below market expectations of a 1.0% gain. This signified the smallest percentage increase in consumer prices since the third quarter of 2021.
Anticipating the latest economic data release, the forecast for the Australian CPI q/q is pointing to a modest uptick, with expectations set at 0.9%. This projection hints at a slight increase in inflationary pressures, which will be closely watched by market observers and policymakers alike.
AUD - CPI y/y
In Australia, the monthly Consumer Price Index (CPI) for August 2023 showed a year-on-year increase of 5.2%, marking an acceleration from the 4.9% gain in July, which had been the lowest in 17 months and in line with expectations. This uptick in annual inflation was primarily driven by faster rises in transport prices, particularly automotive fuel. Other sectors where inflation accelerated included communications, education, and insurance and financial services. On the other hand, inflation eased for housing, food and non-alcoholic beverages, recreation and culture, and furnishing. Excluding volatile items and travel, the monthly CPI indicator rose by 5.5% in August. Inflation remained notably above the Reserve Bank of Australia's target range of 2-3%.
TL;DR
In an eagerly awaited economic update, the forecast for Australia's CPI y/y is suggesting a marginal decline, with expectations hovering at 4.7%. This projection hints at a slight dip in the annual inflation rate, a development that will undoubtedly draw significant attention from economists, investors, and policy experts in the coming months.
Last time, the AUD CPI y/y was announced on the 27th of September, 2023. You may find the marketreactiongraph (AUDJPY M1) below:
AUD - TrimmedMean CPI q/q
The Reserve Bank of Australia's trimmed mean Consumer Price Index (CPI) increased by 0.9% quarter-on-quarter in the second quarter of 2023, showing a slowdown from the 1.2% rise in the previous period and falling short of market expectations of 1.1%. This marked the smallest increase in the trimmed mean CPI since the third quarter of 2021.
In the latest economic outlook, the forecast for the Australian Trimmed Mean CPI q/q remains steady at0.9%, mirroring the previous announcement. This consistent projection suggests that inflationary pressures are holding steady, maintaining a status quo that will be closely monitored by market analysts and policymakers.
The forthcoming release of Australia'sCPI data is scheduled for Wednesday, October 25th, 2023, at 01:30 AMGMT+1.
EUR - Germanifo Business Climate
This data is closely monitored as it serves as a leading indicator of economic health. Businesses react promptly to market conditions, and changes in their sentiment can offer early insights into forthcoming economic activities such as spending, hiring, and investment.
In September 2023, Germany's Ifo Business Climate indicator dipped slightly to 85.7, just below August's revised figure of 85.8, but surpassing market expectations at 85.1. This marked the fifth consecutive month of declining sentiment, with companies expressing less satisfaction with their current business situation compared to the previous month (88.7 vs. 89 in August). However, there was a slight improvement in optimism about the coming months (82.9 vs. 82.7). A breakdown by industry showed worsening sentiment among service providers and constructors, while manufacturers and traders saw modest improvements in their outlook.
TL;DR
According to the latest forecasts, the German Ifo Business Climate is expected to experience a slight uptick, reaching 86.9, signaling a potential improvement in business sentiment.
The upcoming announcement is scheduled for Wednesday,October 25th, 2023, at 09:00 AM GMT+1.
Last time, the German ifoBusiness Climate for EUR were announced on the 25th ofSeptember, 2023. You may find the market reactiongraph (EURJPYM1) below:
CAD - BOCMonetary Policy Report
Typically, the BOC Governor conducts a press conference approximately 75 minutes following the release of this report. This conference offers valuable insights into the bank's perspective on economic conditions and inflation, which are crucial elements shaping future monetary policy and influencing their decisions regarding interest rates.
The report is scheduled for Wednesday, October 25th,2023, at 3:00 PM GMT+1.
CAD – BOC RateStatement
This report serves as the primary means through which the BOC communicates its monetary policy stance to investors. It not only reveals the central bank's interest rate decision but also provides insights into the economic factors that guided that decision. Crucially, the report delves into the economic outlook and offers hints about the direction of future policy decisions.
The BOC Rate Statement is set to be disclosed on Wednesday,October 25th, 2023, at 3:00 PM GMT+1.
CAD - OvernightRate
Short-term interest rates hold a position of utmost significance in the valuation of currencies. Traders predominantly scrutinize various indicators as a means to anticipate future rate adjustments.
In its September 2023 meeting, the Bank of Canada left its overnight rate target unchanged at 5%, aligning with market expectations for a pause in its tightening cycle. The central bank cited a significant economic slowdown in Canada, primarily attributed to a 0.2% annualized contraction in the second quarter, influenced by a deceleration in household credit growth and its impact on overall demand. While considering the potential for prolonged effects of tighter monetary policy, the Governing Council opted to closely assess the relationship between current borrowing costs, inflation, and aggregate demand, refraining from immediate rate hikes. However, the Bank retained the option for future rate increases if inflation remains above the 2% target.
TL;DR
The forecast for Canada'sOvernight Rate suggests a forthcoming increase of 0.25 Bps. This projection signals a potential adjustment in the country's monetary policy.
The upcoming release of the Overnight Rate is scheduled for Wednesday, October 25th, 2023, at 3:00 PM GMT+1.
Last time, the CAD – OvernightRate was announced on the 6th of September, 2023. You may find the market reactiongraph (USDCAD M1) below:
CAD - BOC PressConference
This report constitutes one of the central tools employed by the Bank of Canada (BOC) to engage with investors on matters of monetary policy. It offers a comprehensive analysis of the key elements influencing the latest interest rate determination, encompassing factors like the broader economic landscape and inflation. Crucially, it furnishes valuable insights into the BOC's prospective monetary policy directions.
The BOC Press Conference is scheduled for Wednesday,October 25th, 2023, at 4:00 PM GMT+1.
26thOctober 2023
Thursday
On October 26, 2023,significant events are expected to unfold for both the Euro and the USD. TheEuropean Central Bank will unveil its Main Refinancing Rate alongside theMonetary Policy Statement and ECB Press Conference. Simultaneously, the UnitedStates is scheduled to announce the Advance GDP q/q and Unemployment Claimsdata, setting the stage for potentially impactful developments in the financiallandscape.
EUR - MainRefinancing Rate
Short-term interest rates are a primary driver of a currency's value, while other indicators primarily function as tools for forecasting future rate changes.
The ECB raised interest rates by 0.25 percentage points. While inflation had been decreasing, it was expected to remain high. The ECB's Governing Council was determined to restore inflation to its 2% target and, as a result, decided to increase the three key ECB interest rates. This decision was based on their evaluation of economic data and inflation trends. Despite upward adjustments to inflation projections for 2023 and 2024, economic growth forecasts were revised downwards due to tighter financing conditions, with modest growth being anticipated in the euro area in the coming years. The ECB had planned to maintain these elevated interest rates for as long as necessary to facilitate the return of inflation to its target.
TL;DR
The European Central Bank's forecast indicates that the interest rate will remain unchanged, holding steady at 4.50%. This projection suggests a continuation of the current monetary policy stance.
The forthcoming Main Refinancing Rate announcement is scheduled for Thursday, October 26, 2023, at 1:15 PM GMT+1.
Last time, the MainRefinancing Rate for EURwas announced on the 14th of September,2023. You may find the market reactiongraph (EURUSD M1) below:
EUR - MonetaryPolicy Statement
This announcement holds substantial significance as it functions as the ECB's principal means of communicating with investors regarding monetary policy matters. It compiles the results of their interest rate determinations and provides valuable insights into the economic factors that underlie these decisions. Particularly noteworthy is its inclusion of economic projections, which offer hints about forthcoming policy actions.
The Monetary Policy Statement is set to be released on Thursday, October 26, 2023, at 1:15 PM GMT+1.
USD - AdvanceGDP q/q
This indicator is of significant interest because it represents the most comprehensive measure of economic activity and serves as the primary gauge for evaluating the overall health of the economy.
In the second quarter of 2023, the US economy exceeded market expectations by expanding at an annualized rate of 2.4%, up from the previous quarter's 2%. This growth was driven by a significant increase in nonresidential fixed investment, particularly in equipment and intellectual property products. Private inventories made a positive contribution to growth, while consumer spending slowed but remained above market estimates due to moderating inflation and a tight labor market. Public expenditure grew at a slower pace, and net trade negatively impacted growth due to a decline in exports and imports. Residential investment continued to decline.
TL;DR
In an eagerly awaited economic forecast, the projection for the Advance GDP q/q growth stands at 4.1%. This figure provides crucial insight into the anticipated performance of the economy and is closely watched by analysts and investors for its potential impact on financial markets and policymaking.
The forthcoming release of the AdvanceGDP q/q is scheduled for Thursday, October 26, 2023, at 1:30 PM GMT+1.
USD –Unemployment Claims
Although typically considered a lagging indicator, the unemployment rate is a critical metric for evaluating the overall economic health, as it strongly influences consumer spending. Moreover, unemployment is of great significance to policymakers responsible for formulating the nation's monetary strategy.
In the week ending October 14, the US saw a decrease in seasonally adjusted initial claims by 13,000 to 198,000, with a 4-week moving average of 205,750. The insured unemployment rate remained unchanged at 1.2%, with an increase of 29,000 in seasonally adjusted insured unemployment to 1,734,000, and a 4-week moving average of 1,694,000.
The forecast for the USUnemployment Claims is yet to be determined. Once available, the post will be updated accordingly.
The upcoming release of Unemploymentclaims is scheduled for Thursday, October 26, 2023, at 1:30 PM GMT+1.
Last time, the Advance GDP q/qand Unemployment claims for USD were announced on the 27th ofJuly, 2023. You may find the market reactiongraph (USDCAD M1) below:
EUR - ECB PressConference
This communication channel holds substantial significance as it represents the ECB's primary means of conveying its monetary policy stance to investors. It provides a comprehensive analysis of the factors influencing recent interest rate and policy decisions, including aspects such as the broader economic outlook and inflation. Most notably, it imparts valuable insights into the ECB's prospective monetary policy actions.
The ECB Press Conference is scheduled for Thursday, October 26, 2023, at 1:45 PM GMT+1.
